What are you worried about?
I’m worried about the “markets” being expensive,
and worried about a recession,
and worried about inflation,
and worried about what the Fed might do next
That’s a lot of worries, so let’s look at each one
If you own the “market” via large US index ETFs or a fund that has lots of large-cap tech, maybe you should worry, because they’re expensive
But they’re “working”
Well Japan has been “working” and that’s not expensive
oh
And if “expensive” worries you, then maybe Value managers are your solution because we spend every waking moment (and most sleeping ones) worrying about NOT owning “expensive”
But Value hasn’t been “working” well this year?
Passive Value hasn’t performed well because they’re full of large US banks and oil companies, but I’m talking about Active Value
Yes but some of you Active Value guys have lagged the World Index this year
Well, not all of us…, but if you were worried and we’re sat in cash, then you ALSO “lagged” the World Index
And I dare say by more than my under-performing peers 😉
Besides, most of us Value guys have smashed inflation in recent years
and that’s the real “benchmark” isn’t it?
I mean your cash hasn’t beaten inflation …
Ok but I’m still worried about a recession
Don’t bother – not even a Nobel prize-winning economist can consistently correctly call recessions
I know one such person who didn’t call a “V”or “W” or “U” shaped recession when Covid happened,
they called an “I” shaped one – they thought the economy would tank and never recover
No prize for that call – Nobel or otherwise
And when people called a European recession last year with
the war and
spiking gas prices and
climbing mortgage rates and
Fund Managers went the most underweight European equities EVER, guess what?
What?
No recession
AND Europe outperformed the US!
Even in our nearly 15yr life of the fund, we’ve been through a few recessions and still compounded at over 10% p/a beating the World Index and inflation
Ah yes, inflation, I’m very worried about that too!
Same story – don’t bother – if the Fed with all their Economic PHDs have been pretty useless at getting inflation right, what chance do you have with CNBC and a few Yahoo Finance articles?
And even if you correctly guess inflation and
correctly guess what the Fed says at their press conferences and
correctly guess how interest rates respond
Please don’t think that translates through to guessing which markets and sectors outperform,
interest rates are high and tech has been a winner this year – who guessed that combo?
mmm
Besides, most people worry about what you’re worrying about, and guess what
What?
Most people don’t beat the market
So what should I do?
get Active, get Value
And be like Bobby McFerrin
Don’t Worry, Be Happy