Thoughts On Current Markets

The problem with markets is they are not always rational given our ideas about what makes something rational. Today is no exception. Prices are at or near record highs, yet the circumstances of the country, to be generous, is uncertain.

How do prices stay so high? If they adjust, how will they do it?

Some thoughts:

  • No one knows the future.
  • No one knows how people will react to it.
  • No one knows if the circumstances of the market will change. Government intervention is a common factor.
  • No one fully understands their own methods of thinking about complex situations.
  • No one knows if some other market may become more attractive than the stock market. Maybe as simple as a tax change.
  • Emotion prevails in both times of adversity and in times of euphoria. People don’t manage emotion, they react.
  • Risk tolerance is different when markets are falling.

An Analogy

The stock market is like a rodeo.

“A bull market is a bull. It will try to to throw off its riders.” Richard Russell

If you have that overview, you might not take it personally. The market is just being the market.

The takeaway

Don’t expect more from the stock market than it is prepared to deliver.

Study history. One thing you will find is markets grow slowly and fall quickly. Surprise is not your friend. Know what you will do when it happens.

Hold material liquidity. Over time, fully invested often makes less than a portfolio with a liquidity component.

Liquidity will mean you don’t have to sell to generate money needed for some other adversity that may occur simultaneously. If not needed for something else, it can usefully address bargains that appear.

Be brave. “Holders of quoted equities require much more nerve, patience, and fortitude than for the holders of wealth in other forms.” John Maynard Keynes


I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email don@moneyfyi.com

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