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Remember the Difference between Investing and Entertainment

Hey, the market has been a little choppy since about last August, did you notice?

Yeah, it’s been hard to miss that.

If you look at a five-year historical returns chart of the S&P 500, you will notice that the returns look relatively strong over that time (they were) with about eight dips of varying magnitude and duration. For example, the one in March of 2020 when the pandemic & related economic shutdown began in earnest doesn’t look like much of a big deal on that chart, and in hindsight, does it?

But to put things in perspective, the S&P 500 dropped about 34% in a week.

That was a modern-day, theme-park, rollercoaster, lose-your-lunch sort of a ride. Fortunately, the recovery was rapid, and we were back in positive territory by the very next month. If you had an aggressive stock portfolio at the start of this year, you were quickly down by 10% or more in January. It wasn’t much fun looking at my daily account balance, but I enjoyed putting some money to work that I had sitting in a money market fund awaiting a “buying opportunity.” I did make one mistake, however. One morning I couldn’t find anything I wanted to listen to on my 983 satellite radio stations, so I tuned into CNBC. I like Jim Cramer; he’s intelligent and interesting, even if he is a little (lot) too loud for my taste. He’s like those superhero movie soundtracks; I have to turn up the volume to hear what is said until, BOOM! He’s screaming.

Anyway, I don’t remember what was said, but whatever it was created an incredible feeling of angst down in my innards.

I was either scared of missing out or afraid the sky was falling, either of which is a deadly enemy of investment success. Fortunately, I was able to summon your goodwill and encouragement through the ether (I can’t do this without you, you know) and was able to quickly gather my wits remind myself that I was listening to entertainment, not investment advice. Be afraid, very afraid, when you can’t tell the difference!

All this, of course, brings me to Bob Dylan. I am a big fan of Bob Dylan and Neil Young, but how they ever made it in the music business with those voices is a mystery. This, of course, shows I am every bit as good at discovering musical talent as I am at being a stock picker.

Several of Dylan’s tunes are favorites of mine: “Shelter from the Storm,” “Tangled Up in Blue,” “Like a Rolling Stone,” and of course “Blowin’ in the Wind,” but my all-time favorite is “All Along the Watchtower” as performed by Jimi Hendrix. The purpose of sharing this, other than my being completely self-absorbed, is to tell you about the time(s) I have looked up the internet’s interpretations of AAUW’s lyrics.

As an expositor of song lyrics, the internet is a perfect metaphor for much of the investment advice available through print, radio, television, and over-the-back fence sources.

In both cases, we have endless sources of information, often stated as verified fact, voiced by faceless pontificators who may or may not have credentials or credibility to support their assertions. If you are an older geezer who still enjoys our youth’s songs, give the following lyrics a read and tell me if you agree that it is just absurd poppycock.

My interpretation of many 1960s rock & roll is summarized as differing degrees of talent mixed with varying types of ingested inspiration. My point is, and I do have one as I keep insisting despite any evidence to the contrary, is to not identify lyrics and investment observations as profound when profundity is not in the house. Sometimes, perhaps most times, it is just a cigar.

This, however, does not seem to present the slightest impediment to those pundits who say that the stock market rose or fell 300 points (the bigger the number, the more breathless and excited they become) because Russia or China, or somebody somewhere sneezed. Can you attach cause and effect to those events? No, you can’t, at least not (usually) with any ability to verify the statement as accurate.

In Warren Buffett’s 1990 letter to shareholders, he wrote, “Lethargy bordering on slot remains the cornerstone of our investment style.” Let us remain steadfast in our investment approach and seek entertainment elsewhere! I think I’ll listen to Neil Young’s “Heart of Gold” album on the drive home.

February 2022

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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