Just some quick hits.
Single day rallies like we had to today happen during bear markets. Bespoke put out some numbers and in the short term there are plenty of examples that show further declines, longer term the market is almost always higher after these but that is what the stock market does; it has an up year 72% of the time. Great if the bear market is somehow over but I would be prepared for more volatility in both directions before this thing is over.
Yesterday I wrote a little about the FTX saga. Crypto rallied hard today with everything else. Did it rally because FTX isn't quite dead yet or because everything else rallied? Maybe both, I don't know. I mentioned adding just a little bit of Bitcoin yesterday in the face of "this is the end of crypto" doom. Is it really the end of crypto? I doubt it but who knows? I am speculating based on the asymmetric potential. It could go to a bazillion or zero. Since it has hit either number, it is not dead, the asymmetric opportunity is still there. You should only get involved with money you can afford to lose but also be able to emotionally tolerate buying something that goes to zero which not everyone can do. No one should be surprised if "magic internet money" turns out to have been complete BS. That seems unlikely but is not impossible.
Elon Musk apparently said it is not impossible that Twitter could file for bankruptcy. That didn't take long, I bet his investors/creditors are thrilled. He really is an incredible visionary but he seems to not know how to operate anything, it really is ridiculous. Good leaders put people in the positions where those people can offset their weaknesses but he does not appear to do that. Back when Twitter first went public, Kevin Landis from Firsthand laid out a bullish case for the stock on CNBC that included the idea that there was no other platform that could replace Twitter. As a platform I use, that totally resonates with me. I never bought the stock when it traded and I doubt I will buy it when it relists back on the public market (guessing about that) so it is fascinating to see it get mismanaged over and over.
Here's a blog post about making your finances simpler for whoever in your life might have to takeover or otherwise help you if you get to the point of not being able to manage your finances effectively. One thing I have noticed in talking to both friends and prospective clients over many years is that just about everyone thinks their finances are simpler than they are. Yes, they might think their finances are simple but what about that person who might help you? My wife and I each have a traditional retirement account, we each have a Roth, there's a joint account and an HSA. Maybe that wouldn't be so simple for the person who'd be helping us. We have two pieces of investment property. Is that simple? I don't know. They are adjacent to the house we live in so that might make it a little easier...maybe?
Ok, so not so quick of a hit on this one. The blog post cited the example of one woman who was very diligent about her investment program but then at some older age lost interest in the task. It was not clear to me if a cognitive decline was part of the equation or not. I can envision someone maybe hitting 80 or 85 and losing interest in actively engaging in markets after having long been interested. If this person has no cognitive issues but wants to simplify, this could be where one of those 2 or 3 or 4 fund portfolios that we've been playing around with for the last few months or some other version of this idea (infinite ways to go) could come in handy. No longer wanting to track 15 or 25 or whatever number of holdings any longer seems reasonable regardless of age. It would be unwise to spend no time on your portfolio in this scenario, assuming you don't want to hire someone to help you but via some version of the Pareto Principle, you could capture much of the effect with just a fraction of the time.
Following up on yesterday's point about patience. Most of the tools I use to hedge in client portfolios got pasted today in the face of the 5.54% lift for the S&P 500. Things that "should" go up when stocks go down are very likely to go down when stocks go up. Today was a microcosm for a point I've made 100 times (more than that actually), just as you didn't want 15 or 20% in MLPs and REITs 15 years ago, you do not want that much in things like managed futures or long volatility or any of the others we've looked at. This event will end at some point and when it does, it will be stocks that go up the most, most of the time.
No comments:
Post a Comment