To piggy back on what Saul said about cash, I want to agree: It’s impossible to perfectly time the market. Friday 11/4 was so awful for our stocks that I got down to less than 5% cash, buying as fast as I could. So imagine how much FOMO I was feeling not being able to buy (much) more on Monday and then Wednesday when we were dropping EVEN MORE.
I even thought Wednesday, “did I deploy my cash too soon?” and “How long will this pain continue?” and “Man, it would have been great if I could have sold last November and I had all that cash to buy with today! I could have way more shares of everything than I have now!”
But obviously that is beyond a fairy tale. Yes, days like Wednesday are so difficult, because just when you think we can’t go much lower, we sell off another 5 or 7% in a day. Days like Friday are tough, because it seems like we’re in freefall and there’s no bottom. But days like yesterday remind us, No one knows what’s coming! Who in the entire world was predicting a 10%, 15%, 20%, or 25% pop for our stocks in a single day, or the best day for the indexes in like 3 years??? No one.
Investing this year has been excruciating. But every time I zoom out, I don’t know what we could have done differently. I hold the companies I think are the best! And I believe long term, these companies are perpetually undervalued, not only when they trade at a trailing PS of 15, but even when they trade at a trailing PS of 30. Maybe it’s reasonable to hold more cash when they’re at 50 and 60 and higher, but that’s what I did. Other than that, and the trading around the edges that I’m already doing, there’s really not much to do but wait – and as Saul has said in the past, enjoy the [wild!] ride.
It hasn’t been enjoyable this year, for anyone who invests in anything (even bonds!). But we have to know our limitations as humans. We can look back and do Monday morning quarterbacking, but if we think we could have seen this coming we are fooling ourselves.
Anyway, I’m not trying to start a long thread either, as I’m really just pointing out the obvious. Hopefully this is in some way encouraging. I have no idea if we’ve seen peak pessimism and are headed back for PS ratios of 30 or higher, or if this bounce is just a slight reprieve and we could be in this mess for another year or more. Maybe/hopefully something in between. But whatever the case, my strategy remains the same:
Hold the best companies. …and don’t expect to be able to predict the future.