Great overview of the PermaBears and how they make a living. I know all those names, and know guys who have been severely hurt by following them.
After I retired from trading options at the CBOT, I started managing my own money. Kinda badly. I'd trail the S&P, and then take a huge overweight gamble on something to catch up. As I got older this became untenable so I largely indexed, mostly SPY. I realized two important things: each person's psychology of investing is different. You have to find a way to hang in there. For me, 2008-09 taught me to think "If the world is going to end, I'm going to end with it, but so will 3 billion other people." That blowing up in isolation, as I've seen guys do, is crushing. Being in the company of billions is shared misery. (I also realized, from modeling, that being flexible in my spending also vastly increases your chances. Spend less when times are bad. Splurge on one-time things when times are good. Keep your base "nut" to a minimum.
An older friend told me something years ago. "The stock mkt is the best gift middle Americans ever got. All you have to do is work hard for 40 yrs, save money every month and put it in the mkt and you will have a comfortable retirement". I asked, "Then why doesn't everyone do this?". He said, "The occasional breathtaking volatility.". Light bulb went on. Ah-ha moment. The volatility is the price you pay for the return. Find a way to deal w the volatility, emotionally/psychologically. Whatever works for you. As you said, giving your money to someone to manage is one way to do it. "It's his fault" when it tanks. "I'm a genius" when it soars. ; )
It feels like some people are wired for doom, others for boom. I wonder if there are any investors that can excel at shorting AND buying alternatively?
Great overview of the PermaBears and how they make a living. I know all those names, and know guys who have been severely hurt by following them.
After I retired from trading options at the CBOT, I started managing my own money. Kinda badly. I'd trail the S&P, and then take a huge overweight gamble on something to catch up. As I got older this became untenable so I largely indexed, mostly SPY. I realized two important things: each person's psychology of investing is different. You have to find a way to hang in there. For me, 2008-09 taught me to think "If the world is going to end, I'm going to end with it, but so will 3 billion other people." That blowing up in isolation, as I've seen guys do, is crushing. Being in the company of billions is shared misery. (I also realized, from modeling, that being flexible in my spending also vastly increases your chances. Spend less when times are bad. Splurge on one-time things when times are good. Keep your base "nut" to a minimum.
An older friend told me something years ago. "The stock mkt is the best gift middle Americans ever got. All you have to do is work hard for 40 yrs, save money every month and put it in the mkt and you will have a comfortable retirement". I asked, "Then why doesn't everyone do this?". He said, "The occasional breathtaking volatility.". Light bulb went on. Ah-ha moment. The volatility is the price you pay for the return. Find a way to deal w the volatility, emotionally/psychologically. Whatever works for you. As you said, giving your money to someone to manage is one way to do it. "It's his fault" when it tanks. "I'm a genius" when it soars. ; )
Love your letter. Keep it up. Thank you.
I remember Rod Jellema. I took a class with him at the University of Maryland back in nineteen bada bing.
He would read Frost and Whitman with such spirit like he was discovering something new every time.
And he probably was even though you knew he had read those words aloud to himself and to the students before us a thousand times.
Very cool.
Great as ever, Bob. Thanks.
Good post Bob. Thanks for the reminder.
It feels like some people are wired for doom, others for boom. I wonder if there are any investors that can excel at shorting AND buying alternatively?
Fantastic piece Bob,
Great post!