“No Accountability for Harm, No Foul”
It's only just turned January and the new monster has already been birthed.
China, Tariffs and mind-numbingly bad projections for a recession are now old news (read: Bogus).
The “real” harm has officially arrived – and it's not coming from Ukraine or Russia or China or North Korea or Washington DC or Crimea…
Nope, it's Iran.
There you have it.
They stormed the US embassy – a really dumb idea – and then the US ended the life of their top "military" leader.
And suddenly Bonds became a great buy (again).
Call it the fear trade:
I guess I sorta wish I had not suggested in the last few notes that we should expect something lurking in the shadows to cause some selling at the dawn of the new year.
You can bet that if the "Iran" thing lasts for a few more days, the next thing you will hear will be the "experts" chattering about "How goes January so goes the year...."
In the media world January means the slate is clean - it's a brand new, fresh canvas to fill with all sorts of attention-grabbing stuff.
And as for all that old stuff from 2019 that they wrote about and that was completely wrong and cost you dearly if you were swayed by it?
Well, that’s nothing now: No accountability for harm, no foul.
The problem with climbing a larger mountain every year is the fear of big (and bigger) numbers.
Add in the computer trading, the bots, the speed and the black art of high-speed connections and you get the potential for even bigger swings, more fearful moments and darker nightmares.
The key word here is "moments."
If the years ahead teach us anything at all, it will be the importance of p.a.t.i.e.n.c.e.
We must paste discipline and patience on any plan we build. Why? Because I can assure you that if you thought "news" was more plentiful before - and problems were mounting - you can damn well count on the fact that it will only escalate from here.
The siren call of the markets is the constant search to make things easy - to escape the temporary windows of pain and embark upon that secret, hidden pathway that misses out all of the problems, and which is always in the right place and insures / hedges you from all the risk.
The only problem is that it doesn’t exist.
It never has and it never will.
Our Reality Check for 2020
Even during and after "good years" we must remember this isn't a one or two quarter thing.
It’s not even a one or two year thing.
It’s a decades thing.
Reality hurts. Markets can easily hurt and often need to cause pain in the short run in order to build gains in the long run.
The "fight or flight" syndrome is a strong one for sure. It has tested many and will test more in the future.
Tens of thousands of years ago that response kept you from being eaten by a lion outside of your cave. Today - in markets - it costs you future-wealth-compounding effects.
Let's face it, the last 8-10 weeks were great.
But don't think for a second that tests of those breakouts are abnormal, or that they’re something to run from.
They are not either of those.
They are to be expected, though that does not mean they must happen. And they are to be embraced instead of feared.
Well, if you leave all the fear to those who will sell – and who are selling now "to lock in gains" - they will tell themselves that they’ll buy back in when the selling is over.
But that’s a white lie.
When the selling is over they will espouse how much worse it will get. And they will skewer their own interests by thinking that we can only know it’s safe again at higher prices.
These are the age-old destroyers of wealth: Fear, impatience and the human need to have a reason for everything.