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Press On Good Steward

Daffy and Elmer break into a warehouse and start helping themselves to some heavy oak barrels.

“Is this whiskey?” asks Daffy.

“Yes, but not as whiskey as wobbing a bank,” replies Elmer.

Thanks, I’ll be here all…no, no I won’t be here all week. As many of you know, I gave myself all Fridays off going forward as my 65th birthday gift last year. For my 66th this past September, I gave myself indigestion. The fried shrimp were great, but fried anything doesn’t much like me anymore…maybe it never did; it just took me awhile to accept it.

(I looked it up. “Awhile is an adverb that means for a while, and a while is a two-word noun phrase that means “a period of time.”) Yeah, I still don’t understand it. I did, however, find one grammarian (there’s a career I don’t want, everybody would find me even more insufferable) that wrote, “use the noun phrase a while after prepositions, and the adverb awhile in all other contexts.” Cool beans, I’m good. Hard rules I can deal with. No subjective judgments required.

All that useless thought led me to think about our investing approach and what hard rules I live by in the investing world.

I came up with a few, all of which I’m sure you’ve heard before.

  • Live within your means. i.e., Save some dough.
  • Asset Allocation first. i.e., Clever-seeming ideas can be considered as add-ons after a basic portfolio is in place
  • Debt = bad. i.e., It is easier to borrow your way to insolvency than to wealth. (Remember “Buy Real Estate with No Money Down!!!”? Perhaps not in a rising interest rate environment, methinks.)
  • Don’t be Stupid, i.e., get a little educated and then do what you know.

It’s “Time In The Market,” not “Timing The Market”.

  • i.e., Buy when you have the money, sell when you need the money.
  • Have an Emergency Fund, always. Like I told my kids years ago, money can’t solve everything or even most things, but cash on hand can make some things a lot easier to deal with.

I really do have to remind myself of these things on a regular basis, particularly the one about being clever. I am constantly trying to improve our investment results, constantly honing the approach and sharpening the saw, if you will. As part of my due diligence, I always try to ask myself if the idea I’m considering is “clever” or “too clever by half.”

Interjected rant/rumination: What became of the phrase too clever by half?

It should be of greater use in the internet and social media era. I guess it fell out of favor and surrendered its position to name-calling. I worked with a fellow years ago that said it more succinctly, “Don’t be confused by good luck and call it brilliance.”

Although I don’t believe in luck, I am completely confident in the existence of “statistically insignificant.”

And that, of course, brings me back to Mr. Einstein’s famous quote, “Reference frame is all.” A classic example: If you are standing on the Westbound Limited and cruising along at 100 mph, and you pass a train going the opposite direction at a similar speed, what does the speed of the train(s) appear to be if you are standing on the Westbound, the Eastbound or terra firma?

This thinking is spurred by a few questions I have been getting recently – they always come during the later stages of bear markets. “What can we do to make more money? It’s been a bad market this year; when will we start making money again?”

I understand the feeling, believe me. My all-time high in my 401(k) account was sometime in early November of 2021.

That, if I have my math correct, is about two years ago, and two years in which I have poured as much of my paycheck into the account as I can. This, of course, displays the opportunity for the counter-productive thinking every investor has ever experienced. “I want the market to increase so my account balance is higher, but I’m adding money to my investments, so I want prices lower.”

That only works for Lucy Van Pelt, who famously told her brother Linus and friend Charlie Brown that she wasn’t interested in a life with ups and downs; she only wanted “upper ups” that led to “higher ups still.”

I’m reminded of the time my friend Jim and I were waxing philosophical, and I said we cannot expect our investments to perform well at all times because that isn’t the nature of any other aspect of our existence – everything in life moves in cycles through good times and bad.

He laughingly protested, “Now, just wait a minute. I admit I have fouled up in all other areas of life and created havoc, but I hired you to keep us on the straight and narrow in dollars and cents.” We agreed that either he was being a bit sarcastic or had made yet another grave error in judgment.

So what am I doing while I wait to see my 401(k) balance surpass that old high-water mark? I am:

  • Living within my means. Yep, still on a written budget at my house.
  • Asset Allocation first. Yep, probably 90% of my investments are in vanilla, traditional asset classes.
  • Debt = bad. Double yep. I just asked myself I should borrow a hundred grand to invest in (whatever). I confirmed this was the stupidest thought I have had in recent memory in spite of having given both wardrobe and cooking advice to my wife.
  • Don’t be Stupid. Okay, reasonable people can differ on this assessment (see spousal advice), but in terms of investing, I’m still doing what I’ve been doing for 40+ years.
  • It’s “Time In The Market,” not “Timing The Market.” Yes, still contributing the every paycheck.
  • Have an emergency fund, always. Oh yes. I’m getting older, and my tolerance of getting caught short grows, well, shorter.

I dreamt of a spider a few nights ago. The spider dropped down from her web and sat on my chest to ask, “Why are you so afraid of me?” I replied, “Well, it used to be the fangs and poison and eight legs and webs in the dark, but now it’s because you’re a spider that’s sitting on my chest and TALKING…IN ENGLISH!”

Moral: Spiders are like bear markets; don’t be afraid ’em unless they are sitting on your chest and talking to you in your sleep.

November 2023

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