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Don’t be an “investi-guesser”
On what rational planet does an investor (or trader) forecast yesterday that the S&P 500 would be up 1.5% today after the April Jobs Report printed a 14.7% unemployment rate?
Well, I suppose that if I dug, I’d find SOMEONE out there in internet-land who forecasted it, but it’s unlikely that it’d be grounded in any sort of rational analysis…it would be more of a lucky guess.
Short-term forecasting is not a useful tool for a normal investor (or an advisory firm) to use in the creation or modification of a long-term investment strategy. I’ve had so many conversations and interactions across different sets of people that I’ve heard every conceivable forecast of what’s next…colleagues, analysts, institutional professionals, fellow Board members that sit on investment committees with me…
Clients, friends, rando’s who email me…
The guy who runs the local liquor store, who is curiously optimistic.
I’ve heard so much, I’m coining a new phrase for it (consider this an enforceable trademark)…
“Investi-guessing”
In case you missed the blog last week (come on, you don’t read everything I write, but you are still watching CNBC? FIX THAT.), here’s a blurb on forecasting:
“As for now, I’ll encourage readers to eschew all the forecasts being offered by people stupid enough to pay the placement fees to get on the business news (noise) channels – they are meaningless. People forecasting earnings, people forecasting GDP, people forecasting interest rates, and future inflation – they are all full of shit and it’s nothing but noise.
No one has any more of a clue what May 2021 will look like than they did about what today would look like back in May 2019.”
No one knows anything for sure. I promise. Sound investing needs to be grounded in facts and probabilities – and those are in short supply right now. I think the number one input into any model or decision matrix FOR THE SHORT-TERM is this…
Hope.
And right now, my hope is based on the expectation that no one is sparing any expense or effort towards finding a solution to this entire problem.
My hope comes from realizing that even though this is a terrible situation, it’s one that is caused by a shock rather than a massive accumulation of imbalances in the financial system, as in past recessions.
My hope is also bolstered by the increasing probability that economic activity has seemingly bottomed – which sounds a lot like a forecast, but it’s rooted in some fact-based observations…
Lockdowns are fading – I had to drive into the office the other day, and there was TRAFFIC.
Social distancing is waning – I saw people in parks, walking dogs, and gathering in small clusters having chats. I saw a neighbor on the sidewalk, and we chatted at a reasonable distance for 15 minutes.
People and businesses are adapting – I ask every small restaurant owner how they are doing, and while no one is printing record revenue, they all say the same thing, “We are doing okay and making it.”
I bring us back to a drawing I did a few weeks ago.
Everything is transforming and will continue to do so. That gives me hope, and that’s where I’m deriving my conviction from as I look at the long-term from an investing perspective.
Said differently, what do you think would happen to the economy if a vaccine were discovered tomorrow? With all the stimulus and pent up eagerness to get back to some sense of normalcy, I suspect we’ll see the ship quickly right itself.
And that day will come – it’s just impossible to tell when. So in the absence of that fact, be invested now for when that day comes.
True, some things may never go back to normal. Some old-line industries may disappear or change so much they don’t ever look the same again. Some new companies, technologies, and industries may spring up.
But who knows? This could all reverse tomorrow.
But that’s my point – anyone taking a stand on the short-term is “investi-guessing”, emphasis on guessing. Like anyone, I have no answer to these questions, only guesses:
“What’s going to happen in the market?”
“Do you think we will have a correction?”
“Do you think we have seen the bottom?”
“Don’t you think the virus will come back again worse when we get back to normal?”
“Do you think the Miller Lite tastes great or is less filling?”
With all that said, my advice remains the same…in that everyone should…
Keep looking forward,
Dave
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Important Disclosure Information
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.
All indexes referenced are unmanaged and cannot be invested into directly. The economic forecasts set forth may not develop as predicted. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument Wealth Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Monument Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
A copy of Monument Wealth Management’s current written disclosure statement discussing our advisory services and fees is available for review upon request.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
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