Macro Tourist: ‘You’re Doing This All Wrong’

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A couple of weeks ago, I got accused of being too pessimistic.  I was labelled a worry wart.  People tell me all the time that I don’t know what I am talking about, so this is nothing new.

The reason I bring this up?  Today’s post will probably elicit the same type of response that I don’t understand the seriousness of the situation.

Yesterday, I had a family member ring up me up concerned about his pension accounts.  He was nervous about the stock market and was wondering what I thought.

I told him that my advice was probably not what he wanted to hear, but that selling assets as they go down because of a headline was not a good strategy.  If you are managing for the long-term, the last thing you should be doing is pitching cascading declines and chasing emotional rallies.  If anything, instead of selling stocks down here, you should be selling your bonds which have exploded higher.


This morning’s decline has a panicky feel about it.  No doubt about it.  However, the time to hedge was a couple of weeks ago, not today.

Instead of selling, I would instead humbly suggest you stick to your strategy, and given the huge outperformance of bonds over stocks, it’s time to rebalance back to your target weights.  Yeah, that means selling bonds and buying stocks – not the other way round!

I know it feels scary.  It feels terrible.  I am writing this at 9am as the stock market futures are plunging lower.  Part of me doesn’t want to hit send because what if this is the big one?  Trading is never easy.  Yet, I have found that panicking is rarely the right trade.

PS:  If you are convinced I am wrong, please bring it up with the fellow who thought I was too much of a pessimist a couple of weeks ago.


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2 thoughts on “Macro Tourist: ‘You’re Doing This All Wrong’

  1. In these situations they ‘slide faster than they glide’……If you are net short take that into account because the spin and hype is ferocious these days and the political establishment will pull out all stops to maintain power and control….

  2. You could also argue that bonds were right since last August. I recall stocks bidding up last fall on trade war hype, Fed largess and reflation hopium. The macro and earnings have always been bleak.

    What changed was the optics – the possibility of surreal images of millions dead or dying in a chaotic hellscape of misery. Yeah, I want to short bonds with that in mind.

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