My Portfolio

I tweeted this last night as stock market futures were down around 5%.

I got a lot of feedback on this, mostly positive, but some decidedly negative, sprinkled in with a little name calling.  A lot gets lost in a tweet like this so I want to make a few things clear. Aside from six months of living expenses I have in cash, the rest of my money is 100% invested in the global stock market. When I said I was buying stocks, I did not mean that I already had 20% in cash, or that this was a trade. I was planning to add roughly 1% of my overall portfolio to U.S. stocks.

But alas, I did not get the chance to follow through on this statement. When I woke up losses had been pared to -2% and when stocks opened at 9:30, they were positive within minutes. If stocks had opened down 5%, it would have just been the 76th time that’s happened over the last 88 years. Although the S&P 500 would have been just 7% off its all-time highs, you never look a gift horse in the mouth, which is what I said when I bought more European stocks directly after the Brexit.

To be clear this was not a market call. I don’t have an investment “thesis.” I don’t do macro. I have no idea how all of this shakes out. I don’t know which direction interest rates will go or what effect they’ll have on stocks. I don’t know where inflation will be next year or what it might do to the dollar. I don’t know how a Republican President with a majority in Congress will effect certain laws that might change the way some businesses operate in America. But I am 100% certain of a few things:

  1. I cannot time the market.
  2. Over time, stocks pay you for taking risk.
  3. Less is more, you’re not awarded any extra points for complexity.
  4. Barring an early termination, I have decades of investing in front of me.

There’s another thing here that’s extremely important to me, our clients. If stocks did open down 5% or more, I wanted to be able to say to our advisors and our clients that I was a buyer of stocks. Not that I thought this was the “optimal” time to buy, or that there wouldn’t be more pain ahead, but rather to demonstrate that I practice what I preach, that I eat my own cooking. It’s easy to talk passionately about something when you believe it with every fiber of your being.

People might call me smug, young, or naive. And while it’s true that I never saw my portfolio fall by 50%, to those people I would ask, does experiencing one bear market make the next any easier? I speak to a lot of investors and I’ve never seen someone say “Oh yea, the dotcom bubble sucked and I made some really bad decisions, but then when the financial crisis came, despite millions of Americans and a lot of my friends and family losing their jobs, I just tuned out the noise.”

Please, don’t kid yourself. It never gets easier.

So does this mean that I just buy the S&P 500 and forget about it? That’s certainly not a terrible option and would put me ahead of most investors over the long term, but I diversify across the globe and across strategies. I don’t feel the need to outsmart the market and I’ve never been more convinced  that nobody knows nothing. How could you look at the market today and come to any other conclusion? So that’s what I do with my portfolio. It’s what works best for me. I hope you find what works for you.

The S&P 500 is now 6% off its overnight lows and pretty close to new all-time highs. So I didn’t get the chance to buy, oh well. Maybe next time.


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