I once heard the observation in politics that “If you’re explaining, you’re losing.” It’s a simple and short statement that I find rather powerful. From my political observations over the decades, I see the truth in this statement. As I watched the first Trump vs Hillary debate, my mind unconsciously ran to this schema. Trump was doing a lot of explaining. Therefore, he lost the first debate. Whether this was the criteria employed by other viewers, who knows. That was my thought process.
Another saying I’ve heard lately is, “The only thing that is constant is change.” Another short statement that cuts to the chase. This is particularly true about the stock market. It’s difficult to make heads or tails of the period you’re in until you’re past the period. We’ve gone past the 80’s and 90’s where growth across the market’s was significantly positive. We’ve seen two massive corrections in the span of less than 10 years with the tech bubble and housing bubble. Both were crushing blows to the market. We are now convinced we are in another bubble, but we have no idea as to when the ‘bubble’ will burst. All we can do is point to the Federal Reserve and other central banks and say, “Well, with interest rates so low, the market is the only game in town.” If that’s true, we logically conclude that the level of risk in the market is reduced, so we force ourselves to act bullish.
Though we are acting bullish, we really aren’t bullish like we were a decade or two ago. We are bullish out of necessity more so than choice. It’s an odd reality we live in. I’ve heard that “history rhymes”. I like that better than the idea of history repeating. The idea of history repeating provides too much certainty and with certainty comes complacency. Complacency in life typically does not lead to success. As investors we need to be more active in the sense of monitoring the market and setting rules as to when we are to react to ‘danger’, yet we must not thwart our investments by being overly active traders (unless that is our strategy).
As an investor I feel that we are in the eye of a storm and have been for quite a while. We wait day after day for the coming of some event, good or bad, that changes the market’s direction. Sideways is where we have been for quite a while now with a few sudden corrections. As I’ve heard and been told, “hurry up and wait.”