Hurry Up and Wait
“Throughout all my years of investing I've found that the big money was never made in the buying or the selling. The big money was made in the waiting.” ~Jessie Livermore
You name it, they’ve got a headline for it.
Just when you think Covid is off the top story rota, the geographical variants arrive. The Yemen form. The Guadalupe Hidalgo fever. The Italian job. Looks like we got us the next new strain, Professor Badmodels. Let’s spin up the loo roll sales and batten down the hope hatches.
Same goes for hitting new highs in the major indices – though we can scratch the Nasdaq from that over the last 10 weeks. The scribes of doom have dutifully set about sharpening their pencils and pixels on this new Nomura, Archegos "over-bet-caught-in-the-wrong-direction-margin-call" unwind thing.
Screeds of this salacious guff have been spewed forth creating the equivalent of an equity diuretic. All sound and fury, of course.
And as for the investors?
Well, let them eat cake as the targeted chewing up of stocks for no fundamental reason gets their attention. More fodder for traders and candlestick makers.
Or as Charlie Munger put it: “The world is full of foolish gamblers and they will not do as well as the patient investors.”
Don't Get Me Wrong
As the record setting stock market mountain we’re climbing reaches up into ever higher altitudes, the front-runners always get the hardest hit in a mini panic.
And everything will at some point become a mini-panic – with the worst assumptions garnering the most eyeballs.
It’s in our nature to revel in the negative.
Like that ship stuck in the Suez Canal. It was headline chatter for days. The “experts” predicted months of “stuckness,” supply chain Armageddon, and the charts and graphs of maudlin maths predicting how our economies would suffer.
Behind every event must lurk a mysterious danger. Just like most every financial headline feels like checking under the bed again. There must be a monster somewhere…
Might that we could take a brief reprieve back to the olden days, where pronouns were people too, “sh** simply happened,” and no spluttering cough marooned the world.
When did we arrive at a place in our global perceptions where the automatic assumption was that all was supposed to be easy? That no problems should exist, no difficulties should arise, and no stresses should ever be felt, by anyone, at any time?
Think we’ve forgotten that everything we see around us was at some point a solution to a previous problem.
When we get that one straight, we’ll be able to keep in mind that the pathway ahead to financial rewards will regularly be littered with dismay, discouragement, setbacks, hurdles, problems, and disasters…all the way up the mountain.
Ask Yourself This....
In the middle of all the vaccine garbage in the news, and all the fretting over 40 basis points in interest rate direction, who here guessed that the next mini bombshell would be the unwind of an over-leveraged family office by the name of Archegos Capital?
I didn't think so.
Archegos getting caught sideways has NOTHING to do with any of the following:
- The recent $20 Billion announcement from Intel, building two chip factories in Arizona
- That we are down to less than 8 weeks of housing supply in the America
- The US Federal Reserve release showing record highs reached in every important financial metric on a per-household basis
- Earnings season ahead sure to shatter almost every current record on the books - reaching all-time new highs in the process…
I hope you get my point.
Sure, the Archegos mayhem hurts some stock prices in the near-term but it does not change the fundamental value of the companies themselves.
Dwelling on this is not productive for long term investors.
But it is working for us:
Above is a 3-year snapshot of the fear gauge.
The lows are marked by the disaster that caused it.
In effect we’re seeing crowd emotions at fear levels only rarely seen during times like the China Tariff War and COVID shutdowns.
Call it the silly season. The new spot between earnings seasons.
And now, as always, we must do the toughest thing we can ever do as long-term investors.
Allow time to unfold.
Ask yourself: How did Warren Buffett get so rich? Was it because he traded a lot? Listened to quarterly earnings calls? Called Wall Street analysts to get their "input." Devoured the CNBC news or read headlines?
None of that.
And then he waited.