Dr. Landlord and “Obama’s Secret Pipeline”

Stretching a bit for the May "Idea of the Month," plus some speculations

By xiexgp@gmail.com, May 22, 2015

Maybe the scariest thing I can tell you is, “I’m not selling everything.” The drumbeat in my head continues to be one of worry, I continue to be a little bit surprised at how high stocks are going, and how resilient stocks are. But thankfully, I haven’t been acting on those macro worries — because I had much the same worries a year ago and, well, here we are with the S&P 500 up about 15% since January of 2014, when I felt similarly concerned (my portfolio has trailed the S&P since then, largely because of commodity exposure — it’s up about 13% during that same period, just FYI).

There are many things that cause me to make mistakes, but each year I learn a little bit more about the importance of not “calling” the direction of the market. That’s a fool’s game, or a pundit’s game (after all, they have to say something when they’re on TV every day), it’s not going to do me any good as a long-term investor to guess whether I think the S&P 500 is 20% overvalued today, or 20% undervalued. It is what it is — and it will be what it will be. All I can do is continue to look for investment ideas (or speculations) that I think look compelling at whatever their current valuation is, baking in my hopefully rational expectations about that specific investment, and not invest so much in any one idea that my mistakes are truly painful.

That, really, sums up investing for me. Sure, I do lots of looking at my portfolio to see how the asset allocation lines up (and though they are also an advertising partner, I still find Personal Capital to be my favorite tool for this). I try to take into account the really important ways that diversification matters (not that you have to hold 50 or 100 stocks, but is half of your portfolio tied in some way to the price of oil being higher or lower? To market valuations of one particular sector? To one currency? That should be scary.) I try to control risk through position sizing and occasional trading around stocks I own large portions of, and I try, sometimes unsuccessfully, to have some discipline about adding to or shedding the tiny positions in my portfolio so I don’t spend too much time analyzing the stocks ...

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