Twisting By Bill Poole

Bill Poole just threw a wrench in the works and knocked the market down as he tried to dampen expectations for a rate cut. As I write this the market snapped back a hair off it low and while the reaction was swift it was not that big–unless the other shoe drops in the last few minutes. I am torn between the goal of staving off recession and my concern that the dollar decline could move a little faster than the market can handle comfortably. No answers here just a little conundrum to close out the...

Reader Question

A long question came in about when to undo a defensive strategy. The reader joked that “I’m right, until I’m wrong” may not be the best plan. Click here to read the whole comment. I can only try to answer this from the context of how I get defensive, what I have done before to get less defensive and to point out that I have no expectation of being exactly right with what I do. Some of this will also be discussed in this weeks video. The first thing to mention is that I say at every turn that I do not make big bets. In getting defensive I start small so that if the sentiment gets whipsawed the portfolio won’t. Earlier this summer I sold one stock and added about 1.5% to the double short fund with the willingness to do more if the market had deteriorated any further. Last summer I did something similar and my lead versus the benchmark unwound, this year it appears to have increased (details to come in the video) due, I believe, to the snap back in certain parts of the market. With all of the action that transpired this summer I took very minimal action. The focus was to be disciplined to my defensive strategy while at the same time realizing that the market was in a fast panic and dumping a lot of stock into it, as some readers commented that they had done, would be the wrong trade. I commented countless times this summer that it was a fast decline and that fast declines snap back quickly. Last year...

Reader Question

A long question came in about when to undo a defensive strategy. The reader joked that “I’m right, until I’m wrong” may not be the best plan. Click here to read the whole comment. I can only try to answer this from the context of how I get defensive, what I have done before to get less defensive and to point out that I have no expectation of being exactly right with what I do. Some of this will also be discussed in this weeks video. The first thing to mention is that I say at every turn that I do not make big bets. In getting defensive I start small so that if the sentiment gets whipsawed the portfolio won’t. Earlier this summer I sold one stock and added about 1.5% to the double short fund with the willingness to do more if the market had deteriorated any further. Last summer I did something similar and my lead versus the benchmark unwound, this year it appears to have increased (details to come in the video) due, I believe, to the snap back in certain parts of the market. With all of the action that transpired this summer I took very minimal action. The focus was to be disciplined to my defensive strategy while at the same time realizing that the market was in a fast panic and dumping a lot of stock into it, as some readers commented that they had done, would be the wrong trade. I commented countless times this summer that it was a fast decline and that fast declines snap back quickly. Last year...

PoTAYto PoTAHto

I used that title once before. A reader commented that he was 80% equities, 20% cash and referred to himself as bullish. I replied that I was similarly allocated but would describe myself as leaning bearish. I have commented once or twice that that labels such as these, while convenient, tend to be a waste of time. You save and invest for some purpose. You need to stay relatively close to some benchmark over longer periods of time and if you can successfully navigate one down a lot market you will add tremendous value to your long term results. The media’s quest to label any dip, do you think this is a correction or a more serious bear market, is a huge waste of time. A few weeks ago a reader left a series of comments that were “bearish” in nature. His point of view made sense but I perceived a desire and a priority on his part to be right. This is a much different mind set than what I think is an easier path for making your way through the market. Anyone participating in the capital markets for any length of time is going to be wrong about a lot of things. I view the task of managing money, whether it is yours or someone else, as capturing most of what the market does (a little better sometimes and a little worse other times) over time, not seeking a moral victory for occasionally making a prescient market call. The types of things I write about are actually about not having to be right in order to have...

PoTAYto PoTAHto

I used that title once before. A reader commented that he was 80% equities, 20% cash and referred to himself as bullish. I replied that I was similarly allocated but would describe myself as leaning bearish. I have commented once or twice that that labels such as these, while convenient, tend to be a waste of time. You save and invest for some purpose. You need to stay relatively close to some benchmark over longer periods of time and if you can successfully navigate one down a lot market you will add tremendous value to your long term results. The media’s quest to label any dip, do you think this is a correction or a more serious bear market, is a huge waste of time. A few weeks ago a reader left a series of comments that were “bearish” in nature. His point of view made sense but I perceived a desire and a priority on his part to be right. This is a much different mind set than what I think is an easier path for making your way through the market. Anyone participating in the capital markets for any length of time is going to be wrong about a lot of things. I view the task of managing money, whether it is yours or someone else, as capturing most of what the market does (a little better sometimes and a little worse other times) over time, not seeking a moral victory for occasionally making a prescient market call. The types of things I write about are actually about not having to be right in order to have...