Clearing the Brain with a Break
Having taken a break from posting from the beginning of October through most of November, I can tell you it's had its intended effect: clearing the brain.
Of course, despite a brain cleared now of various detriti (plural of detritus?), I stake no claim for smartest or brightest. That shouldn't be surprising since there really aren't that many stand-outs in the world of investment management. Most of us professional money managers more or less muddle through.
Then again, it's not like I'm a slouch either. Ever since I committed to a more "rules-based" approach to managing money, things have flowed more smoothly. Results have been more in line with expectations. Perhaps most important, risk - in the form of volatility - has been minimized.
But if you're paying someone to knock the lights out, I'm not your man. Shooting for the moon has never been an aspiration of mine. I'd rather hold onto my hard-earned money, albeit with some reasonable gains in proportion to the risk I'm willing to take.
How about you?
If you're a moon-shooter, how's that going? Now, don't tell me you've had good year if you've allocated all your eggs to the stock basket. Anyone who's all in stocks has had pretty good year so far. And that'll be all well and good until the next bear market rolls around. When (not if) it hits, you'd better have one of two things: some kind of strategy to protect or preserve your assets when stocks start tanking or; a strong stomach that will allow you to hold on as you watch your liquid net worth dwindle - perhaps as much as 50% or more.
Why 50%? Well, stock have had such a strong run-up since 2009, with few meaningful breaks, it would be only natural for the next bear market to drop in a manner commensurate with that run-up. Not that such a drop is a slam dunk. If it were, we'd all be shorting like crazy once the bear begins.
Besides, the Fed has been successfully floating the stock market and the bond market, as well as the economy, for so long now, most of us have forgotten there's a thing called the business cycle that brings us, on a fairly regular basis, recessions to balance and offset economic expansions.
Which means we circle back to the whole recession debate.
Debate? What debate? That one seems to be fading fast as stocks continue to hit all-time highs.
Doesn't it seem like only yesterday when warnings were flying at us from all quarters? Every time stocks had a minor bad run, especially when the yield curve inverted for a small stretch, the "R" word was dripping from the lips of major media.
Or course, a lot of that had to do with the media's hatred (Is that too strong a word?) of Donald Trump. You got the feeling they were almost hoping that a nasty recession would descend on us just so Trump wouldn't get re-elected.
Heck, maybe that'll happen.
But if you check our last post, we discuss this briefly. The timing would have to be spot on for a recession to hit before the next election. Not that it's impossible. Just that a bear market in stocks would likely have to begin pretty soon.
But back to clearing the brain...
It's something I've wanted to do for a long time. And I'm glad I did it. Foggy brain: bad. Clear brain: good.
Of course, despite a brain cleared now of various detriti (plural of detritus?), I stake no claim for smartest or brightest. That shouldn't be surprising since there really aren't that many stand-outs in the world of investment management. Most of us professional money managers more or less muddle through.
Then again, it's not like I'm a slouch either. Ever since I committed to a more "rules-based" approach to managing money, things have flowed more smoothly. Results have been more in line with expectations. Perhaps most important, risk - in the form of volatility - has been minimized.
But if you're paying someone to knock the lights out, I'm not your man. Shooting for the moon has never been an aspiration of mine. I'd rather hold onto my hard-earned money, albeit with some reasonable gains in proportion to the risk I'm willing to take.
How about you?
If you're a moon-shooter, how's that going? Now, don't tell me you've had good year if you've allocated all your eggs to the stock basket. Anyone who's all in stocks has had pretty good year so far. And that'll be all well and good until the next bear market rolls around. When (not if) it hits, you'd better have one of two things: some kind of strategy to protect or preserve your assets when stocks start tanking or; a strong stomach that will allow you to hold on as you watch your liquid net worth dwindle - perhaps as much as 50% or more.
Why 50%? Well, stock have had such a strong run-up since 2009, with few meaningful breaks, it would be only natural for the next bear market to drop in a manner commensurate with that run-up. Not that such a drop is a slam dunk. If it were, we'd all be shorting like crazy once the bear begins.
Besides, the Fed has been successfully floating the stock market and the bond market, as well as the economy, for so long now, most of us have forgotten there's a thing called the business cycle that brings us, on a fairly regular basis, recessions to balance and offset economic expansions.
Which means we circle back to the whole recession debate.
Debate? What debate? That one seems to be fading fast as stocks continue to hit all-time highs.
Doesn't it seem like only yesterday when warnings were flying at us from all quarters? Every time stocks had a minor bad run, especially when the yield curve inverted for a small stretch, the "R" word was dripping from the lips of major media.
Or course, a lot of that had to do with the media's hatred (Is that too strong a word?) of Donald Trump. You got the feeling they were almost hoping that a nasty recession would descend on us just so Trump wouldn't get re-elected.
Heck, maybe that'll happen.
But if you check our last post, we discuss this briefly. The timing would have to be spot on for a recession to hit before the next election. Not that it's impossible. Just that a bear market in stocks would likely have to begin pretty soon.
But back to clearing the brain...
It's something I've wanted to do for a long time. And I'm glad I did it. Foggy brain: bad. Clear brain: good.
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