Whether long-term or
short-term; large cap or small cap; value or growth; there is no methodology,
no panacea, for altering the conditionality of a secular “life cycle.” Try as we might to change them, generational
themes play out with a predetermined sequence that is difficult to change with
a wave of the wand. Isn’t the essence of
great literature, after all, the push/pull of preordination versus one’s power
to change events? While I am not suggesting that all themes are
inexorably determined by fate, I believe that cycles need to complete before devolving,
changing direction, or expiring.
Thus it is with financial trends that, despite the
reasons being given on 24 hour cable business news, financial and certain
demographic trends happen with or without the Fed’s assistance, trader’s
intervention, earnings reports, business announcements, or analyst’s
justification.
They occur because life
happens, patterns evolve, and trends develop.
Science or mythology?
I am, similarly, not suggesting
that there is “nothing we can do about
it.” The science of portfolio management (in particular my science of
quantitative market analysis) is to analyze these trends, and those factors
that comprise them, to determine influence, magnitude, velocity, duration and,
ultimately, optimal asset allocation. However, to imply that exogenous influences
might be imposed upon these factors to change a trend is the great fallacy of
politics, economics, and social studies.
To be sure, there are
underlying factors which comprise the data of my science such as fiscal and
monetary policy (interest rates), earnings, sales, consumer demand,
geopolitics, microeconomics, etc. None
of these factors, alone or in sum, however, are stronger influences than the
time in which they exist.
I’m sure you’re thinking “but the Fed said…” or “the Congress said…” or “housing starts were…” If so, then you
fail to capture a larger imagination.
History has always been marked by great periods of famine, disease, art
and literature, religion, agnosticism, war and peace. Civilizations develop around great centers of
culture, mighty rivers, strategic and polemic thought. These are concepts of epic proportion, not
just mundane day-to-day concern.
What time do we live in, and how can we use these
cycles to maximize our place in the world?
Or as a client might posit “Yes, but what do we invest in today?”
Within or without?
These answers are not
short-term oriented, nor are they simple.
What makes markets ‘go round is the diversity of aperture we each bring
to finding solutions. For some, it is
trading; for others it’s longer-term.
For others still it’s the legacy of fine art, real estate, or other
“treasures.”
It might also be a commitment
to a higher order: a connection to
others, one’s health, or spiritual and psychic awareness.
The fascination I have for my
work is that, looking from the top-down, the possibilities are endless,
artistic, and never dogmatic. Investing is understanding the needs of my
clients and their attitudes about their place in the world.
Those answers are not on cable
business news.
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