We humans are an impatient bunch, aren’t we? We want results, and we want them right NOW! If we want to lose weight, we want to eat one proper meal and suddenly be slender. We want to go to the gym, work out once and be fit. We want to invest some money and be rich by tomorrow! We all know that it takes a proper diet and consistent exercise a long time to get an overweight couch potato into shape. And the older we are when we start, the harder it is to do it. But that doesn’t keep us from wanting it easy and wanting it now.
Thinking about it, why wouldn’t we be inclined to believe we can get what we want faster. 20 years ago, if you needed information, you waited until you could get to your desktop computer and spend long hours researching lots of websites to get the information you needed. So you didn’t search unless you really needed it. Oh, and for you young people, 30 years ago you’d find yourself in the library researching what you needed. Today you pull your smart phone out of your pocket, pull up the search engine Google, and have what you want in an instant. Not long ago I was arguing with my grandson about how many headlights a 1970 Chevelle had. He said four, I was sure it was two. Before I could even tell him how wrong he was, he was showing me a picture of the front of a 1970 Chevelle (with four headlights) on his phone. Instant gratification. A few years ago we would have had to agree to disagree because I was sure my wrong notion was right.
Unfortunately, we can’t Google the body or the health we want and have it right away. We can’t instantly pull up the next stock that will explode in value overnight. It takes time, and patience. I have been questioned a few times recently why we are so cautious right now and holding so much of our asset base in money market funds. The answer is that our research is telling us to be cautious because of all the underlying facts about the market that are unrecognized at this point. When will those facts be recognized? If history is any indication, they will be recognized AFTER the market has gone down. People will be doing the post-mortem on their investment decisions and will be saying things like “nobody saw this coming,” or “the stock market shouldn’t have gone down based on (enter excuse here).” So to those of you who have been wondering why we are as much out of the market as we are, we want to assure you that our reasoning is sound. Frankly, I would rather be fully invested right now, and get everything the market has to give me while it is going up, but that would be an emotional decision, not one based on discipline. If we want to maintain our discipline, we are going to need to manage assets in a way that sometimes seems counter to the prevailing wisdom. I truly wish this didn’t have to happen because we look like we’re not doing anything when we are sitting in cash while the market is going up. But we do not run our models that way. If the research calls for us to get invested when the market goes down, or for us to be less invested while the market is going up, we believe it is better to follow the research than it is to follow our flawed instincts. So please don’t get too impatient with us. We know it may be difficult to wait, but we honestly believe it is the right thing to do at this time.