Yesterday fear/concern/whatever else kicked up a big notch based unscientifically on many conversations I had with all sorts of people I know (I heard from more people phone and email than I typically do). Also regular visitors may have noticed the that the number comments left on the blog have gone way up, a phenomena that both Barry and Dr. Brett have commented on before.
The US stock market is down in the mid teens in just a few days. That is a crash. Although we may be still be crashing for a few days more (don’t know, more like bracing for the possibility), taking drastic portfolio action in a market crash is a dangerous thing to do.
If you have been reading this site for a while you may be thinking easy for him to say which is a fair criticism but panic is not the answer. Violent selling always exhausts and reverses for at least a short amount of time. Lightening up into that sort of move is likely to be the better way to go. Notice I am saying lightening up not jumping out.
A couple of weeks ago I sold a couple of positions (disclosed in a video) in the interest of, no shock, a little more defense.
One stock was an energy name that is down 28% in a couple of weeks (less actually) since that sale. Mature energy stocks don’t drop that much in so little time. The other name is a healthcare name down 22% since the sale.
This is not a comment on my skills, the declines listed above are very typical of many stocks from the last two weeks. That magnitude in a couple of weeks is a crash (intentionally repeated from above). In addition to a crash in stocks every part of the fixed income market is grossly distorted and or ceased up from normal functioning.
There are a lot of moving parts to the crisis, many initiatives fully or partially implemented and other ideas still on the drawing board. These will either help bring a faster end to this or they will impede progress to an end but I do believe it will end and as silly as that comment may sound to you it is an open ended issue for many people.
I wish I knew how long this will last but I don’t. Someone I spoke to commented on the extent to which I have been even keel about all of this. Two things; I took my own advice about laying out a plan that would help and stuck to it and I realize that the movements of the market is beyond my control. There is zero value in getting worked up over things beyond your control.
Additionally no plan can be perfect it can only put the odds in your favor, my plan for defense is no exception.
The picture is the way in and out of the Waipi’o Valley on the big island. There are driving restrictions, we have hiked it twice. It isn’t even a mile but it is very steep.