I read an enormous amount of literature, articles, bloggs, and books to keep on top of the complexity of the markets. As well as reading I listen to podcasts that further explain the complexity of the markets. I love to learn how SIV's are structured or what CDS's do, I especially love to read the Zero Hedge blog because of the amount of technical, wall street insider-type of info. I consider myself to be the constant student, earning my Masters of Crisis Degree.
But at the end of the day all those things don't matter if you do nothing with the information, knowing the train is barreling down the track is far different from preparing to avoid the train by taking action and stepping off of the tracks.
What I'm getting at is that I have to look beyond the stressors of today and peer just beyond the horizon of next week and make calculated decisions based on what I know today. Looking out even 2-3 years right now and making predictions is useless because the market is stressed and things are changing rapidly
In times of stress humans and animals react with physical responses to the apparent threat. The blood pressure rises, the body mobilizes energy to the tissues that need it most, our short term memory improves, and long term projects such as immune system and reproduction are set aside. Focusing on the short term vs. the long term could be the difference between life and death. When the stressful situation has subsided and relative calm has been restored the body moves into a more balanced state (equilibrium).
The marketplace is actually just an extension of the human emotional condition, therefore the marketplace responds in the same fashion. Stressors cause an over-emphasis on the short term and steps are taken to survive the current situation at the detriment of the future. We are certainly seeing this happening now with all the government intervention and spasm-ing of the markets. The world has become very unpredictable and uncertain, therefore how can the investment minded person like myself make predictions 2-3 years in advance. You can't, not with any serious hope of being accurate.
All this leads me to my conclusion, and that is to survive the current crisis I am of the belief that it will require extreme portfolio fluidity, I don't mean moving in and out of positions quickly because that is the path to the poor-house in this market for me (maybe not for everyone). What I mean to say is that I have to be willing to abandon certain bias's in the face of overwhelming evidence to the contrary. A perfect example would be that I am a firm believer that deflation will grasp hold of this economy and make the debts unsustainable, therefore causing more debt-deflationay spirals. But we live in a world of a limited supply of resources and a whole lot of money printing, inflation may win the day. That is my long term strategy in the short termism of today's market. Eventually eqilibrium will be restored, wherever that might be, and we can resume the 2-3 year outlook with a little more clarity.
Staying afloat is more important than being right.

Ver todos los episodios