Best laid plans.
The nature of investing, if the less patient amongst us haven’t noticed, is that tides ebb and flow, back and forth, sometimes painfully, sometimes gleefully, correcting assumptions we might have held, or confirming the most bizarre suspicions. All in all, one’s track record of success, or defeat, is defined by the consistency of one’s methodology and the frequency of positive pulsebeats one can amass over a specific duration.
Quite often, though, there are episodes of unique distinction which break all patterns and/or defy clarity. And usually that lack of clarity allows some to be sucked into unhealthy logic. If you think back over your own experiences, you might recall a handful of these situations and their impact upon your financial success. In most cases, these are unpleasant occurrences and caused you abusive results.
Being invested means you are linked to these market cycles, with no particular control over them. The availability of data and analytics might help you to divert the significance of downside events or magnify the opportune upside circumstance. Even so, including the most savvy of us, we can only respond as best we are able to the longer-term-trends or the one-off exogenous event.
The biggest mistake, though, is to run away from what appears to be a proper fit and to abandon logic when logic and calm are most needed.
Connect the dots.
The credit crisis of 2008 was a “sophisticated mania” that deleveraged portfolios, markets, corporations, and our logical ability to process the complete dissolution of our traditional financial institutions. Today, if we were to do it all again (and hopefully not) we might consider that today’s upside response to the chaos has simply brought us back to equilibrium, made us “whole” again, but hasn’t addressed the systemic inequities of structure and values which brought the calamity upon us in the first place.
The most significant of these issues is the gap between creating profits and product, and connecting with the needs of the persons/entities that require these services in the first place. Our “new” network of responses is no different than the old and, if left unrepaired, have the capacity to wreak the same havoc. Closing one’s eyes to a situation does not mean the problem has gone away.
When the markets began their steady rebound over 10 months ago, it appeared on paper as if the excesses had been corrected. Today, we look at “new highs” as integers with an asterisk. There are factors which might indicate, as I previously wrote about parallel disconnects, that the market and the economy are not necessarily one and the same. Whereas mistakes and failures are inevitable, I hope that the mania on the way up is not met yet again by a panic on the way down.
One can dream.
As an “educated” group, we investors, there are standards of morality and humanity that must be met in our dogged pursuit of profits. For one, everyone who is able should have a fair shot at achieving investment success. Too many feel that the deck is stacked in favor of block trading, institutions, black boxes, and corporate self-interest.
The biggest challenge, for the balance of this year and beyond, is to crystallize our forecasts into do-able solutions for all investors, and to avoid the vagaries of markets that capriciously destroy not only portfolio valuation, but investor confidence in the financial markets overall.
Scotty C. George
(212) 624-1147
The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and it accuracy cannot be guaranteed. It is intended for private informational purposes only. Any opinions expressed are subject to change without notice. Du Pasquier Asset Management and its affiliated companies and/or individuals may from time to time own or have positions in the securities or contrary to the recommendation discussed herein.
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