“Don’t let them try to upsell you
There’s a reason they make chocolate and vanilla, too”
~Sturgill Simpson in “Keep it between the lines”
This market has given every single one of us plenty of ways to be “wrong”, courtesy of swift reversals, multiple historical percentage moves and plenty of “we’ve never seen this before” circumstances. It also has paid wonderful homage to timeless wisdom; accented by the quote from Sturgill Simpson above as a portrayal of the importance of having and sticking to boundaries. (Musical side note – the entire album is pure gold once you read the excellent backstory on the brilliance which you can read here:https://www.rollingstone.com/music/music-album-reviews/a-sailors-guide-to-earth-205874/ ).
Though there were ample opportunities to be wrong, discipline to investment boundaries once again helped many be “right”. And I don’t just mean discipline to stay invested at the March lows, I mean it for the discipline to have not gotten stretched too aggressively leading up to the February reversal. That sounds much easier now in retrospect now than it did with a market that was consistently trending higher at the time. Discipline on both ends paid huge dividends and I am thankful to have our investment philosophy built around these principles.
If left purely to invest based on my own views and inputs, I am certain I would have missed a large chunk of this rally believing that the potential negative outcomes over the coming medium term remain underappreciated and undervalued (and conversely the positive ones being assigned too high of a probability). Here’s the thing; you can get wrong, stay wrong and then lose your confidence. In that case, even if the market works towards your view – you may not ultimately be there to be rewarded. Thankfully, I don’t support any such efforts that would invest around my whims. Our investments are weighted by the measuring of value and the observations of trends and with teamwork to provide diversification in viewpoints. (Another aside; I am beyond fortunate to have @AndrewThrasher as my daily partner in crime. It’s one thing to have teamwork and another to have a player like Andrew on board).
Boundaries lead to natural diversification. If you limit your bonds, you should own some stocks. If you limit your stocks, you should own some bonds. I don’t condone just buying a basket of everything to check all the asset class boxes and believe your diversification work is done. But I am a firm believer that investors must own enough (truly different) things to protect you for the times in which the cards go against you. It protects you from being over exposed to or overly influenced by any one factor. Which I whole heartedly believe applies to our country’s demographics as well.
When thinking through these basic concepts for this article and being grateful for the discipline of diversification, I kept hearing echoes about the importance of these are great for our society as well. Personally, during these past few weeks I have tried to do my best to be slow to speak and quick to listen. I admit this is easier said than done on heated issues, but an abundance of listening is crucial for hearing the voices that need heard at this moment in time. I am thankful for all the positive influences around me that have been great leaders by example of this during this pressing time.
As challenging as this has been, I can’t help but to feel so much optimism for our future after seeing so many in our nation come together and fight for righteousness and justice. A nation more divided than ever? I don’t believe it. I see a nation finally coming together to stomp out the remnants of fires that have darkly plagued our nation for centuries. We are finally going to put an end to police brutality and the disproportionate killing of black people. The time is overdue, but here we are – together and united we stand.
I don’t want to dive too much into my personal background (shocker), but I have seen the ugliness of racism firsthand. (My school had a giant confederate flag painted on the wall until the early 2000s!!!). Things as simple as a joke about our differences do nothing but perpetuate the divide. It makes me sick to think what I might have said to whom as a young person. I share this to say just how important it has been in my life to listen to others, particularly those much different than me.
I can remember vividly just a few years ago the days following Colin Kaepernick’s decision to kneel and protest the anthem. The very next day I saw an acquaintance at a youth football game who just happened to be wearing the SF #7 jersey. I went up to him and said “Man, you’re brave”. He agreed once he knew what I told him what I was talking about with the kneeling. At the time, I didn’t see the kneeling as a race issue and it did not sit well with me initially to see them kneel during the anthem. That’s not the way I was raised. But with a little active listening, I came to embrace and support the protesting players and why they were doing it. From the comforts of my community, I was taught to stand for the anthem. Meanwhile their community observations included the disproportionately killing by police. It was never about the flag or an anthem. Not then. Not now.
Boundaries around power and the importance of diversification has been crucial for surviving one of the harshest investment environments imaginable. The same will be true for our country. Different races and ethnicity bring strength to our national fabric. They will play an even much stronger role when given truly equal opportunity. You and I all aren’t going to agree on all the solutions, but I hope you will join me in enthusiasm for what lies ahead in our country.
