February Starting Gate

Starting Gate is supposed to be an entirely logical follow-up to the Monthly Performance Reviews whereby I attempt to discern some sort of investing path forward gleaned from the markets - such that they are. It is the ‘what am I gonna do now’ after the previous months ‘what I already done did’. Sometimes it works well - when I can actually get it all bucked-out before mid month or so - and then sometimes it just provides more crowed space in my already beleaguered mind. Hard to tell which direction it will most likely spin off in prior to actually working my way through it. Sigh!

Note 1) I am a amateur investor. These posts of mine are nothing more than a historical record of transitory muck-ups on a clearly much convoluted path toward better investing results.

They say that historically we are off to the worst market start in history; which, you have to admit sounds a little daunting on the face of it. It’s like the moment in one of those movies where the good guys are hacking their way through the jungle only to come to a display of skulls and skeletons ominously blocking their path - or something like that.


We have inflation to consider and its effects on the market - made worse by the wondering what in the world the FED will do about it rather than just blather on. Then you have societal chaos with the country divided in half, international intrigue with China and Russia, and the market’s flight to value. What to make of all that should be the key problem for those who would invest wisely - I suppose. However, on the opposite side, the economy seems to be doing really well on its way back from a pandemic that might, or might not, be slowly slipping into history? That is - unless some other annual variant therein pops up.

So what to make of it all from my church mouse perspective? Well - I do like Andres approach to it all a great deal- which is to say, he doesn’t much claim to know either. That said, in his weekly update posted yesterday he notes that the outflows from ARKK were substantial last Monday perhaps marking a sort of capitulation. ARKK as the poster child for high growth. Here are a few quotes from his update:

"Monday was an atypical day in the markets with stocks deeply in the red. Then the market reversed and most indexes closed in the green. Bloomberg covered the market action on Monday with a very clear explanation:

You have a massive wave of selling, retail investors panic and sell at the bottom, pushing prices even lower. Then the hedge funds and algorithms need to buy in order to close their short positions."

From the article: https://www.bloomberg.com/news/articles/2022-01-24/small-fry…

Wondering what the force was that turned an orderly decline into a full-blown route this morning? Mom and Pop bailing.

In a spasm of panicked selling early Monday, retail investors offloaded a net $1.36B worth of stock by noon, most of it in the first hour, according to data compiled by JPMorgan Chase & CO.
strategist Peng Cheng. By his estimate, share disposals were 3.9 standard deviations heavier than the full-day average in the previous 12 months.

"It is very important to understand what your timeframe is and to make decisions based on that timeframe. Like Yogi Berra said: “If you don’t know where you are going, you might end up someplace else.”

“Looking at the market sentiment, AAII survey is showing a level of pessimism that is actually quite extreme. Statistically speaking, markets tend to perform well when pessimism is so elevated.”

All of which, boils down to me in a rather simplistic form, to wit: Just have a plan - tweak your plan as needed - stick to your plan. Nothing earth shattering there.

So - that’s the Starting Gate plan for February: Stick to the plan. It appears that through nothing more than the vagaries of life I simply somehow missed the panic phase of perhaps a capitulation. More to the point, as Warren says, buy when others are selling and there is blood in the streets - and there is most certainly painful blood losses in the streets just now. So that’s what I will do. Seems simple enough as long as you have the courage of your convictions and the support of a well designed plan.

All the Best,