“Perspective” – The capacity to view things in their true relations or relative importance.
I’ve been a full time student of the markets since the beginning of 2007. I’ve written extensively about my process over the years, starting as more of a fundamental analyst before making my way into a strictly technical approach. As I evolved, I wanted to incorporate as much information as I could into the decision making process. Today the process of stock selection and building portfolios relies upon a multifaceted approach tying together fundamental, technical, and quantitative analysis. I believe this approach lends itself well to remaining objective, and objectivity is paramount in the money management business. At most it keeps you on the right side of the trade. At least, it keeps you from getting killed.
Any one who sets out to become a market “expert” sees mentors come and go. Learning from others’ methods and sampling bits and pieces from their processes is all part of the journey. Some mentors remain relevant, others fall by the wayside as the student surpasses the master. In my own case, the majority of those I once saw as mentors have fallen by the wayside – by my own choosing. When I made the decision to manage money for others I felt it was appropriate to rely upon my own judgement and system. This helped to quiet the noise and as I write this, the noise out there has become deafening.
Not all mentors were left in the past. One in particular offered up some words of encouragement at a time when they are they are needed the most. At a time when finding a quiet place is nearly impossible. He is a pro’s pro, and a voice of reason when reason is hard to come by. I’ve read these words again and again. And then I read them some more. These words and what they stand for are a super power. That super power is perspective, and we could all use a little perspective right now.
Either you believe that investing for long-term returns is good, and right, and true, or you do not.
That’s it.
Either you are compelled to have perspective seeing that in the last 80 years four out of five years brought in positive total returns for the S&P 500 and the average positive year is larger than the down year (on average), or you are not.
I cannot give you perspective.
I can offer you data to support the growth of that cognitive muscle.
The bottom line is that on your way to making lots of money in the stock market, your account will likely lose lots of money.
Volatility is real.
The impact on psyche is real as well.
For all the paranoia surrounding technology, make no mistake, due to breakthroughs in technology, lives have been saved, economies have been resuscitated, and the general world order has been preserved itself while pursuing the largest, most coordinated global cooperation in the history of mankind.
So, yes, technology companies that are empowering this change, that are enabling this change, will see their stock prices go up.
For the crew out there, that sits in incredulity at some of these stock prices, in our opinion, it would be incredulous if they didn’t rise this far this fast.
So, yeah, stuff is going to get weird in the stock market.
There has been an unnatural exogenous event that has had an unnaturally negative impact on human kind.
In response, governments are having to act in unnatural ways to combat an unnatural systemic and human risk.
It is the understanding that this unnatural disturbance requires an unnatural response that market participants should grasp.
The market will have an unnatural response to this unnatural disturbance and equally unnatural intervention.
It is going to get bumpy and the stock volatility to follow is the only part of this whole thing that is natural.
A day, a quarter, even a year, cannot encapsulate the changes that have already been laid.
This understanding that whatever the market does today has no impact on the view of the future has a name.
It’s called perspective.
The rare (rare) few have it.
It is these rare few that we call the best investors in the world.
It is this group of people that you can join, by making a decision.
You are the best investor in the world with perspective.
Don’t lose it.
-Ophir Gottlieb, October 2020
Trent J. Smalley, CMT