One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity. -Bruce Lee
Every now and then I get together with some friends in the finance world and during a recent meeting one of them seemed overly preoccupied with world events and how he perceived them to be having a potentially significant impact on his portfolio. As I sat and listed I couldn't help but thinking back to Benjamin Graham's classic quote that:
The investor's chief problem - and even his worst enemy - is likely to be himself.
My friend (who works in the asset management business) was contemplating going to cash because of:
- Worries about the Chinese economy and its stock market run up
- Grexit fears
- Brexit fears
- US first quarter GDP weakness
- Anemic wage growth in the United States
- A pullback in 10 year Treasury yields
- What the Fed is going to do with rates
- Severe underperformance in the transportation index vs. the overall market
- Crude oil price volatility
- Inconsistent growth in Europe
- A flat lining Japanese economy
- Unrest in the Middle East
I may have forgotten a few, but I admit to having tuned out in the face of an endless barrage of fear and worry. What he wanted to know was my read on these issues. What way did I expect them to move the market in the short to medium term? Well my answer was: who knows? At the end of the day not even the most esteemed and experienced economists in the world were able to predict the Great meltdown we had in 2008-2009 which took stocks down 50% in just a few months.
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