3 things I’m thinking about this week…

1 –  Most Likely to...Gain Weight?  High school yearbooks are filled with odes to popularity…most likely to succeed, etc. The market has a little bit of this in it these days. It loves to back popular stocks and push them higher. Think of the “Magnificent Seven” as an example. But popularity booms lead to busts in time.  Ultimately the market stops “voting” on popular stocks and starts “weighing” them on value created, the heavier the better. Your investment advisor’s job is to seek out investments poised to put on a few pounds, so to speak. From Jeff Bezos’ 2000 letter to Amazon shareholders:

“As the famed investor Benjamin Graham said, "In the short term, the stock market is a voting machine; in the long term, it's a weighing machine." Clearly there was a lot of voting going on in the boom year of '99--and much less weighing. We're a company that wants to be weighed, and over time, we will be--over the long term, all companies are. In the meantime, we have our heads down working to build a heavier and heavier company.”


2. - A Culture of Learning.  Culture is an element left out by many investors as they research investments, possibly because it’s hard to quantify. One element of many winning cultures is that they encourage questioning.

Four Seasons founder Isadore Sharp shared in his memoir the story behind their first island resort: Four Seasons Nevis. In 1989 there were no other hotels larger than 12 rooms on the island. The employee base was new not only to luxury hotels but also to electric appliances. So, Four Seasons began by “judging, by attitude, whom we should and shouldn’t hire, then patiently helping them understand how and why we did things, and doing this in a way that wouldn’t make them reluctant to go on asking questions until they got it right.” Six years after groundbreaking, the resort was voted best hotel in the world by Condé Nast Traveler.

 


3. - Watch The Market Less...Talk To Yourself Instead.  Jason Zwieg, investment writer for The Wall Street Journal, took a half-year hiatus from watching the stock market to write his next book. His conclusion: reacting to the news “can poison your portfolio and sour your life.” Did I mention he works for The Wall Street Journal?   

2 more thoughts from the article below: forecasting doesn’t help you do better with your money. And…perform mental time travel – try writing a letter to your (future) self, saying what you expect from making an investment change…to reduce the tendency to overreact to short-term news. And it can reduce anxiety a bit, not a bad thing. Reminds me that in planning you are doing something similar – attempting to make the right decisions today to benefit a future version of you. 

Taking A Market Break

…and one more thing:

 For my fellow Excel nerds…

-Dave