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Bear Markets And The Biggest Fool’s Errand
This scarcely bears mentioning, but considering what stocks, rates and, increasingly, analysts, are
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Thanks for that timely reminder!
Philosophical Economics has a blog (lately inactive) that has three articles from 2016 about timing recessions and markets. They are classics. Even if you find them too mathy, it is easy skip to the conclusions that he reaches after each section. Well worth googling.
I never understood the distain about catching falling knives.
Yep good stuff H.
Music to my ears.
Good advice and worth heeding.
H-Man, not sure I agree with the market timing premise being foolhardy. Sure with a long enough time horizon, being long equities makes sense. But as that time horizon shortens, being long into an avalanche is not the best strategy. It really becomes a strategy of deploying assets based upon whatever risk/reward model you follow. It also assumes that you know how to short any particular market which is out of favor. Being long vol in February and March of 2020 was a winning strategy, being long vol when equities recovered in March was a loser. As T. Boone Pickens once said investments are like trains or buses, there is one leaving every couple of minutes.
Testing comment box.
Test part one:
@hookandgo
H-man recently sold some Bitcoin and bought some Energy. Probably an example of most excellent “market timing.” Instead of couching this tired old bit of financial clickbait as market timing, recast it as risk management, and compare the thought experiment’s conclusions. Imagine you are about to retire and pondering drawdown rates. Imagine you are retired. Imagine you find yourself in a position where principal preservation is paramount. Why? IDK, maybe you like eating? The vast majority of trades are now executed by algos. It is probably reasonable to assume most of those trades are not considering the pros of buying and holding (B&H) for the long term returns. The sad fact is CPI kills your stock market returns. The sad fact is most carbon based investors only have a very small holding period compared to the time frames used to justify B&H theory. The sad fact is most retirees have to spend what ever income their portfolio throws off, meaning, their portfolio’s price line chart can never have the glorious positive slope their investment advisor brochures display. Subtract CPI from that portfolio price line and it starts looking pretty limp. But it gets worse this April of 2022. See the visual aids in the Bloomberg article 4/12/2022 by Lu Wang titled,
“Valuation Bloat in Stocks and Bonds Is Catching Up With the Bull Market”
How long does long term need to be? I am thinking not that long- just enough to get to 2023.
If you set aside 3 mile island and chernobyl, the nuclear power industry has an excellent safety record.