Many of you ask me questions about the stock market and I know many more of you have questions but not the time to ask them. With the advent of the internet and constant access to information, it leads to more questions than definitive answers. There are always two sides to an issue, belief, or stance. Often a Google search will yield millions of articles on each side. How do you know what to believe? How do we?
It’s not easy.
But it’s my job.
It’s my job not just to invest your money but to deeply study the market, it’s history and its influencing factors.
We get questions when the market is at new highs, which it has been almost daily this year. We get questions when people read “The Next Crash is Coming Now” or “The Market is Over-Valued”, which is almost as often. Then, we get the same questions when the market has a down day, which has been rare this year.
Here are the most common questions:
- Will it go higher?
- When will it crash?
- Is this the correction?
- What are you doing to be cautious?
- Are we going to sell high?
- Are we going to sell Now?
Here are the answers to the questions above.
It might go higher. It will crash one day, not likely soon, because the economy keeps improving, but never say never. This is not the correction, YET. Yes, we did, we sold 15 to 20% of our stock holdings across many accounts in late October and early November. We sold at the all-time high at that point. We may sell some more soon.
I love getting and answering your curiosities, as some of you can attest. I just feel bad from time to time when I cannot get to them as quickly as I’d like. There are a few times a year when there is so much work I’m not able to be as responsive or detailed. So, thank you for your patience at those times.
The Market vs. The Economy
In late 2016 and early 2017 TV and Internet pundits were calling for a stock market correction or crash, but we had evidence from FactSet saying the economy was turning around. So, we invested some. And then we invested more, not because the markets kept going up, but because the economic signs kept getting better. This is a key distinction. The market will go up, down and sideways daily and weekly, but the economy typically trends for longer periods of time.
If we had believed all the articles early in the year saying the market was over-valued and didn’t see signs of the economy turning around we’d be out of the market and made little or no money this year in one of the better, least volatile years on record.
We are in a very sweet patch right now as all of you know, and we’ve had at least 60 record highs this year. I could not have imagined better than what has happened this year, when I started our firm 3 years ago. It would have been unrealistic. Yet it’s happened.
Get Comfortable Being Uncomfortable
Yet even with all this good news, I’ve got my eyes on the horizon. The difficulty with investing is it’s uncomfortable. It’s my job be comfortable being uncomfortable. At my firm, our first thought is always don’t lose, but we have to drive the car into the corner hard to win the race.
It’s very difficult to discern what could happen next year, to have a view, to be correct, to weed out what is and is not happening, and then invest accordingly. Someone once said we would never leave our house if we succumbed to all the fears we have about what’s going on in society. My job is to invest despite my fears. So, when I’m not investing your money, or moving it around for you or researching historical truth and even investment inaccuracies at times, I read constantly.
Informed > Information
I read and watch and listen and learn, so you don’t have to (if you don’t want to). I do this to find the sources who are correct most often, and Institute for Trend Research (ITR) has been right for us since 2007.
- They called the crash prior to the crash in 2007 (we discovered them after doing so).
- They called the flat spot in the economy, for late 2015 early 2016 ahead of time which lead to double 14% declines, and our taking our foot off the gas, keeping 40% in cash as we built our research efforts, trading platform and firm.
- And after they called for an accelerating economy into Mid 2018 which gave us some of the confidence to invest last fall.
Now they see slowing growth in late 2018.
4 years ago, they had a recession at that point. Slowing growth is better. Hopefully that means our rally can last a little longer. Then we’ll see if tax cuts, should they materialize, have the positive impact people expect. We’ll see.
Reading ITR, Hays Advisory, and FactSet provides data we can have confidence in. Two of them are not tied to a mutual fund or investment companies, so they have no reason to tell us to stay in any market. They can call it like they see it, and the third one does so as well.
Read It All, Don’t Believe It All
In addition to this I read about the markets, threats, risks, downside protection, crash management, asset allocation, portfolio construction, financial planning, individual companies, their markets and potential penetration of those markets, articles, blogs, newsletters, white papers… Whew. Just in the last 3 months I’ve probably attended 10 webinars about asset allocation and portfolio construction, all with a tag line or header saying they are different. They have lured me in to ultimately see and hear the same traditional approaches that give people market returns. Every now and then there’s been a morsel we can implement.
I do all of this, so our approach continues to be built on a foundation of facts. I do it, so I know what you’re coming across and can proactively answer your questions. I do it to stay on top of things for you, bringing to your attention stories and decision-making criteria that you need to see. I do it, so we can keep finding ways to try to impact and influence returns for the better.
I do it so hopefully we never have to say: “Oh well, everyone lost money so we’re all in the same boat.” Or the dreaded “There was no place to hide.” Because the truth is, there was a place to hide if we had made a different decision beforehand... We aim to make more and lose less when it matters. It’s my job to stay on top of all of this for you. We aim to be better. Lord willing, we will be.
To each of you who has noticed and thanked us this year, it has been so much fun, but not easy! And thank you for noticing. It motivates me to humbly keep our nose to the grindstone.
All the Best!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. No strategy ensures success or protects against a loss. Investing involves risk, including loss of principal.Article Tracking Number 1-673882