Please don’t make this a long string - If you have something to say, send it to me, don’t post it.
Not too long ago Saul posted about a long time board member who got scared out of the market last year an as a result lost out on a lot of the gains. I am that member. I might add that not only did I miss out on a lot of gains (I finished the year up just under 100%), I’m also paying a penalty in capital gains tax this year for my folly. Truly an act of stupidity driven by fear. In a nutshell, I felt a worldwide pandemic actually was “different” from anything we’d experienced and I thought the recovery would be a long time in the making. I was wrong.
So I look at my portfolio and it’s down a lot. Today alone with 20 minutes until the market closes I’m down nearly 8.5%. I won’t tell you that is in dollars, but it’s a big number from my point of view.
What’s going on? Why are we taking such a big hit? Interest rates? really?
Our companies are capital lightweights. Most of them have zero debt and a lot of them have a pile of cash. Interest rates are virtually irrelevant. How about their customer? OK, maybe a lot of them are more capital intensive and will be hurt by rising rates. But it seems to me if that’s the case those same customers would want to accelerate digital transformation and the move to the cloud in order to reduce costs and capital demands.
It just seems totally irrational to me - but maybe I’m missing something. I’m not an economist or anything like that. I’m just an investor. And nobody ever said that the market acts rationally, at least not in the near term. So, frustrating as it is to see the erosion in my portfolio, I’ll wait it out. I pointed out to my wife, the last time our portfolio was at this level was last November. But it was rising at that time and we were pretty excited about it.
