A few weeks ago I was having a conversation with the people who serve the ads on this site and they noticed a drop in my traffic. I made the observation that bull markets and other forms of feel good rallies tends to cause page views to drop. This is an observation first made by Barry Ritholtz quite a while back–bear markets are good for blog business. Whether the current lift is a bull or something else it is clear that that people are generally feeling pretty good so of course at some point there will be too much feeling good and then the market will again put a scare into people. When that happens there will be reaction like this has never happened before. It is astounding the extent to which people do forget past market pain and then live it for the first time whenever it happens. I’ve told the story before of a former client (he ended up realizing he could not tolerate stock market volatility) who would call in a panic and how I would remind him that he had been through more of these than I had but of course at the time there was no ability to explore this with him (at least I could not figure out how). The reason to bring this up is as we sit here today the market is feeling pretty could, it has been lifting for several months and of course there is no way to know how long it will continue and no reason that if it does continue for an extended period that there cannot...

A few weeks ago I was having a conversation with the people who serve the ads on this site and they noticed a drop in my traffic. I made the observation that bull markets and other forms of feel good rallies tends to cause page views to drop. This is an observation first made by Barry Ritholtz quite a while back–bear markets are good for blog business. Whether the current lift is a bull or something else it is clear that that people are generally feeling pretty good so of course at some point there will be too much feeling good and then the market will again put a scare into people. When that happens there will be reaction like this has never happened before. It is astounding the extent to which people do forget past market pain and then live it for the first time whenever it happens. I’ve told the story before of a former client (he ended up realizing he could not tolerate stock market volatility) who would call in a panic and how I would remind him that he had been through more of these than I had but of course at the time there was no ability to explore this with him (at least I could not figure out how). The reason to bring this up is as we sit here today the market is feeling pretty could, it has been lifting for several months and of course there is no way to know how long it will continue and no reason that if it does continue for an extended period that there cannot...

Sunday Morning Coffee

Bernie Schaeffer had a write up in Barron’s in which he referred to an article from the New Yorker. There was one line in there that intrigued Bernie that was particularly interesting; In effect, [investors have] decided that, in a market as volatile as this one, the only way to win the game is simply not to play. The cash that is built up on the sidelines has been talked about for a while with some believing that it will provide a big lift to equities. I tend to discount the argument because the cash we hear about includes money that was never and will never be put into the stock market. The more interesting nugget is the psychology or impatience that leads to people giving up. Many believe that capitalism is broken and that capital markets no longer work. I hope I have been clear that I disagree with that idea. Clearly some things have changed with economies and debt levels such that it has weighed heavily on equity market returns for many of the largest markets but long dry spells have occurred in the past–this is not unprecedented in terms of how the market has reacted. That we are 12 years into this for the US and almost 23 years in for Japan certainly makes the slog long in the tooth but as pointed out in many previous blog posts there have been plenty of other markets that have had normal returns or better than normal over the last 12 years. The extent to which the above New Yorker quote has any merit it expresses people’s inability...

Sunday Morning Coffee

Bernie Schaeffer had a write up in Barron’s in which he referred to an article from the New Yorker. There was one line in there that intrigued Bernie that was particularly interesting; In effect, [investors have] decided that, in a market as volatile as this one, the only way to win the game is simply not to play. The cash that is built up on the sidelines has been talked about for a while with some believing that it will provide a big lift to equities. I tend to discount the argument because the cash we hear about includes money that was never and will never be put into the stock market. The more interesting nugget is the psychology or impatience that leads to people giving up. Many believe that capitalism is broken and that capital markets no longer work. I hope I have been clear that I disagree with that idea. Clearly some things have changed with economies and debt levels such that it has weighed heavily on equity market returns for many of the largest markets but long dry spells have occurred in the past–this is not unprecedented in terms of how the market has reacted. That we are 12 years into this for the US and almost 23 years in for Japan certainly makes the slog long in the tooth but as pointed out in many previous blog posts there have been plenty of other markets that have had normal returns or better than normal over the last 12 years. The extent to which the above New Yorker quote has any merit it expresses people’s inability...

Chasing Heat

Yesterday I was in Phoenix for a client meeting. In the meeting I was asked about whether I would ever try to seek greener pastures and while the answer is I can’t envision a better scenario than what I have now it got me to thinking about the extent to which investors (including professionals) seek (chase) greener pastures in their portfolios. This is really about patience and the potential consequence of losing patience. A big part of what I do with my typical day is to try to learn about other people’s process, companies that are new to me, developments in companies we own, countries and themes. Like many people I am interested in getting a little better at what I do and so the overall portfolio approach evolves over time. If you read this site then you probably have some similar interest in learning in the manner I describe. This might be difficult to articulate but the above describes the honing of a process. You probably have some sort of investment process that you have a basis for believing will give you a decent shot of having enough money when you need it. Over time you learn a lot of things about markets and investing and maybe incorporate some of what you learn into your portfolio and so it evolves. The flip side potentially comes in a year where some particular process doesn’t work so well (no approach to investing can be best for all market conditions) and patience is lost. This is what leads to panic selling and panic buying. An example might be last April with...

Chasing Heat

Yesterday I was in Phoenix for a client meeting. In the meeting I was asked about whether I would ever try to seek greener pastures and while the answer is I can’t envision a better scenario than what I have now it got me to thinking about the extent to which investors (including professionals) seek (chase) greener pastures in their portfolios. This is really about patience and the potential consequence of losing patience. A big part of what I do with my typical day is to try to learn about other people’s process, companies that are new to me, developments in companies we own, countries and themes. Like many people I am interested in getting a little better at what I do and so the overall portfolio approach evolves over time. If you read this site then you probably have some similar interest in learning in the manner I describe. This might be difficult to articulate but the above describes the honing of a process. You probably have some sort of investment process that you have a basis for believing will give you a decent shot of having enough money when you need it. Over time you learn a lot of things about markets and investing and maybe incorporate some of what you learn into your portfolio and so it evolves. The flip side potentially comes in a year where some particular process doesn’t work so well (no approach to investing can be best for all market conditions) and patience is lost. This is what leads to panic selling and panic buying. An example might be last April with...