I will attempt to keep this investment related, as “You should know how policy is being made because it can affect your portfolio greatly”, as I think we all now understand.
You know how that one manager you had always decided on whatever pitch s/he heard last? This is that.
From the Wall Street Journal today:
Trump Advisers Took Advantage of Navarro’s Absence to Push for Tariff Pause
On April 9, financial markets were going haywire. Treasury Secretary Scott Bessentand Commerce Secretary Howard Lutnick wanted President Trump to put a pause on his [aggressive global tariff plan]. But there was a big obstacle: Peter Navarro, Trump’s tariff-loving trade adviser, who was constantly hovering around the Oval Office.
Navarro isn’t one to back down during policy debates and had stridently urged Trump [to keep tariffs in place], even as corporate chieftains and other advisers urged him to relent. And Navarro had been regularly around the Oval Office since Trump’s “Liberation Day” event.
So that morning, when Navarro was scheduled to meet with economic adviser Kevin Hassett in a different part of the White House, Bessent and Lutnick made their move, according to multiple people familiar with the intervention.
They rushed to the Oval Office to see Trump and propose [a pause on some of the tariffs]—without Navarro there to argue or push back. They knew they had a tight window. The meeting with Bessent and Lutnick wasn’t on Trump’s schedule.
Yeah, they waited until Navarro was out of the room, then bum rushed the President like it was pledge week at the fraternity, and got him to send a tweet pausing the tariffs for 90 days. They waited until he actually sent the tweet to make sure it would happen.
So when it comes to strategery [sic], your portfolio is in your own hands, or maybe in a cat fight behind closed doors, or maybe just floating aimlessly in the wind.
About as I suspected. The money interests are fine with the racism, and police state tactics, but when their interests are being hurt, they yank TIG’s chain.
I wouldn’t really call it “spur of the moment”. It just really obvious when TIG hits one of the guardrails. There clearly are no guardrails when it comes to the Constitution, rule of law, or people’s rights. In “JC” fashion, those seem to be deemed expendable, in the pursuit of power and wealth. But when the profits of TPTB are impacted, he backs off.
I learned my lesson in October 1987 during the Black Monday crash when the DOW lost 22.6% in one day. Stayed out of the market for the next 2 years. I’m at least 25% poorer today as a result.
Ever since, it’s been Long-Term Buy & Hold and “Stocks for the Long Run.”
It’s too bad human beings can’t learn this stuff. It seems that you have to actually experience the losses due to market timing for it to sink in.
Nobody said you had to stay out for 2 years. Why in the heck would you do that? It sounds like you either were not paying attention to the market or didn’t have a process to get back in.
My process over the last 35-40 years has been Long-Term Buy and Hold.
To be a successful market timer you have to “right” twice – when to get out, and when to get back in. That’s why only about 2% of amateur market timers are beating LTB&H. Why would I want to spend the extra time and effort on a process with a 98% chance of under performing LTB&H? Especially when LTB&H is more likely to make you wealthy?
To be a successful LTB&H investor, you just have to read and understand last 40 years of market research. Jack Bogle has been preaching this stuff since the 1970’s.
People make that sound harder than it is. I know that sounds smart but let’s put it this way. If the market falls 30 percent and I get out after it falls anywhere from 5 to 25 percent and then get back in anywhere from 5 to 25 percent, even if I only beat you by 1 percent I am ahead of your buy and hold.
Sure and he was very successful selling books on it to people that thought he was right. But when the market falls 30 to 50 percent it can take you years to get back to even and that is fine if you are invested in Index funds but those that are invested in single stocks, they can fall over 50 percent and take a life time to get back to even, some of them never come back.
I don’t think Jack Bogle was motivated by author’s royalties. Heck, he probably left $15 to $20 Billion on the table by making low-fee Vanguard a mutual company owned by its shareholders, rather than the privately-held, for-profit model that made Fidelity’s Johnson family billionaires.
Like I said, if you’re among the 2% that can market time successfully and beat the S&P 500, congratulations. But the research tells me that if I can capture that first 98% by basically doing nothing with LTB&H, why spend the time and effort market timing, and accept the risk of failure?
American culture values “hard work” and “looking busy”, even when doing nothing is the most profitable path. The arithmetic will set you free.
You keep saying 2 percent. Could you show me the study that says 2 percent time the market successfully? Also, for someone who works so hard to save money on your healthcare I would think spending a little time on your investments might not be a bad return.
I’ve been through two 50%+ drops in 2000 and 2008 and it hasn’t fazed me. That’s because retirement investing is a 50-60 year project. Five or ten year returns are lost in the round off.
I have about 20 individual stocks in my portfolio. And about 30% of my assets are in index funds today.
I don’t have any stocks in the portfolio that are showing a loss. It’s all tax-paid cost basis and unrealized capital gains after 40+ years of LTB&H, and selling 1 or 2 laggards in December of each year to reduce my tax bill. Eventually you run out of the tax losses, and the winners continue the ride.
If I was starting out today, I’d definitely be 100% index funds. I bought individual stocks 40 years ago because mutual fund expenses were much higher. Now that you can buy an index fund with a 0.015% expense ratio (Fidelity’s Index 500), there’s really no reason to bother with holding individual stocks. But there is no way I’d sell a stock and incur a large capital gains tax, just to move the money to an index fund.
Nobody was saying anything about fazing you, it was about returns and missing the 50 percent drops. You were saying only 2 percent of people could get it right and I don’t believe that is true. I think that is a made up number. When something drops 50 percent it is really hard not to get it right.
Well that is the thing, when they go bankrupt they are no longer in the portfolio. It’s also about returns, something can be in the portfolio for years and show a positive return but when looked at over 40 years the return can be so small that it is not worth even holding.
Yep my workplace is no longer DEI. The management is backbiting each other. The principles of leadership fell out the window. Pricing shifted upwards but it is going to get very hard to get those amounts for long.
I am expecting mass layoffs throughout the US economy to start very soon. As soon as the older inventory from China is gone.
At the same time, you need to be more specific about your exit and entry rules. Since you don’t know ahead of time how much the market is going to drop, when do you get out? Let’s say you’re the nervous type and exit at -10%. When do you re-enter? Maybe at -15%. But perhaps it’s a shallow correction and never gets to -15%. After going sideways and up and down for a while the market is back to -11%. You are still waiting. Then there is some good news (elections, interest rates, etc.) and the market opens with a 2% gain. Now you have a nominal loss. What to do? Take the loss or wait to see if the market drops again? And then the next day…
You are asking for perfection. You don’t have to pick the absolute top. Neither do you have to pick the absolute bottom. It is enough to get out of the way of the bulldozer, whether you do so by 20 inches or 20 yards.
Meanwhile those confidently claiming that the only thing to do is “ride it out” have not seen a market like the Japanese had in the 1990’s (+ 20 years) or we had in the 1930’s (+ 20 years). There have been others, not so dire nor so prolonged, but they have existed throughout history and in all markets around the world.
I am reminded that the dollar is now worth less than it was in 2020, so even those saying they are back to even have a bigger hill to climb (given purchasing power) than if they had gotten out of the way of the train and back in at some (probably not perfect) time. Meanwhile you have the opportunity to put cash to work earning interest, staying even, and getting back in when the time feels right.
Can you “time markets perfectly”? Of course not. Nobody is claiming that. Can you pick every stock that’s going to go up? I don’t think so. Can you use common sense coupled with macroeconomic trends to see where the economy is going? I say yes.
[Meanwhile we are treated to this blather:
I begged my adviser to sell amid the market turmoil. He dragged his feet and I lost $20,000. Do I have any recourse?
The response from the bright lights at MoneyWatch completely ignores the point, that the writer asked to be taken out of the market and the “advisor” decided to overrule - and the advice columnist here sides with the advisor, saying “Oh, stay in the market. Always, and forever, no matter what.”
For me, it is when it is clear that there is little upside in remaining invested. I stated last year that is uncommon for the market to be as strong in year three when it has two years of 25% returns in a row. Forward P/E continued to be extreme and excessive, we had tariffs around the corner, and inflation showed signs of ticking back up.
With the current risk free return being only slightly less than what the market was forecasted to do the rest of this year, that was a clear sign for me to get out in February. I sold two days before the market peaked.
With that being stated, I did not get out during Covid or during the rising inflation of 2022 because it was not completely clear to me that there was little to no upside. This February was different.
I am now fully back in having protected myself from losses close to 30%. If the market gets back to the ATH, I will make over 50% this year.
That definetly helps but people that do not have tax-deferred accounts do it also.
Yes, that is true you have to be specific about your exit and entry rules. Warren Buffett does it with valuation. When things start getting to expensive he stops buying. It isn’t magic the market is getting extended and he stops buying and more money goes to cash. People beat up on him for his cash hoard but it is all part of his system.
William O’neil has a method (Investors Business Daily) that is more of a technical approach. When your stocks start dropping past the 21 ema or the 50sma you start selling your stocks. It will get you out around a 5% loss or less. Then you start counting distribution days in order to figure when to get back in. There is a whole process to it that you would have to read his book to get a feel for it. So a shallow correction isn’t a problem and you are not going to be exactly correct, nobody is looking for that, they are just trying to keep from losing 50 percent or more. If you lose 50 percent you have to make 100 percent to get back to even. Look at your returns. How many years will it take you to double your money?
The worst part of the system is the Chop, where you go up and down up and down, sort of like now where everything is run on rumors and Trump could come out tomorrow and send the market up or down 20 percent. But that is all part of it and you just do not want to go all in.
I see a reason for buy and hold and that is if you own dividend stocks and are using the payout to fund your retirement or build towards a retirement. You wouldn’t want to be selling them because you are trying to build a annuity. But maybe with those you follow the Warren Buffett method and sell some towards the top to get a cash hoard for the coming drop.
Like I said, it will never be perfect and I would never tell someone that what they are doing is wrong. It’s your money and everyone should understand how to make it work for themselves.
That is impressive Hawkwin. I am down 9% this year so you can see that my method is not perfect. I was down 5% but with the chop and trying to get back in I am now down 4% more. So to get back to even I have to make 9.9% very doable. You say you would have had 30% losses, so with that loss you would have had to make 42.86% to get back to even. A lot of the stocks I was invested in like Celh, and ELF. Elf and Celh have both dropped over 50% from their highs.
