It’s been a harrowing 3 weeks, all the more because I see no fundamental economic justification for this ridiculous volatility. That doesn’t stop the markets, or my research, and I found two pieces worth mentioning.
One was during my Saturday morning review. Instead of going for a run, my sport was reading the repartee in the WSJ. Have a look at the WSJ’s Justin Lahart’s piece “Why This Market Meltdown Isn’t a Repeat of 2008.” http://www.wsj.com/articles/why-this-market-meltdown-isnt-a-repeat-of-2008-1452892357
The headline says it all, and it’s pure entertainment to read between the lines and identify the perpetual doomsayers, government haters, tax haters, and sundry other “axe to grind” posters to an article about this dip being less scary than the 2008 lead in to the Great Recession. I read all 262 comments. There were about 15 worth reading.
My takeaway is: Yes we have an imperfect government, we are in it for the long run, and no one ever knows what next crisis lurks around the corner – and don’t believe anyone who tells you they do. I don’t live my life cowering waiting for the next bogeyman and almost 35 years as a professional investor has taught me I don’t fear the market “crash around the corner” either.
The second piece came from Larry Kudlow, one of the Fairy Godfathers of Supply Side Economics, a theory to which I do not subscribe. Regardless, he’s a smart guy, before he became a TV personality we were in the same professional crowd, and I respect his research if not always his judgment.
Here’s the link from the NY Sun http://www.nysun.com/national/dows-thousand-point-plunge-highlights-the-need/89411/. He is spot on about China and the need to let markets do their thing. I ignore his Billionaire’s Club recommendations that “burdensome regulations” harm our economy but I do agree tax reform would be a boon to our economy and market. Despite our differences, I am relieved to see there is at least one level-headed seasoned pundit who sees China for what I have always believed it is – an emerging economy. At this point it appears China will remain emerging until they understand a free market economy requires capitalist actions. Or in this case, inaction.
Both pieces offer insights for investors, some of those insights are contrarian indicators, and that’s useful as well.
So by all means, read the financial news for the entertainment it can offer, or worse watch the talking heads yammer on, but For The Love Of God, please don’t let those with an axe to grind influence your own portfolio. The people who realize their financial goals and retire when they want to retire are those who establish a prudent asset allocation, pay attention and reallocate when they need to, buy the right assets in their asset classes, and ignore the prognosticators.
If you manage your own money, pay attention. If you hire a professional investor to manage your portfolio, check in. And if your “financial advisor” isn’t a professional investor, or worse, isn’t a Fiduciary, now might be the time to reconsider and get yourself one. Unless you are in no hurry to retire, because it might take you longer than you expect if you don’t have a Fiduciary Investor in your court.