Time, NOT TimingSubmitted by RetireWiseCFP on January 10th, 2022
About seven weeks ago, a potential new client referred by a very satisfied client asked me a tough and, at the same time, straightforward question. He said, "I am aware of the strategic advice and the GREAT results you've achieved for my sister and her husband. Can I expect a similar result?” Without hesitation and with an abundance of confidence, I said YES, BUT it will take time. I do not have the timing prowess you are expecting of me. The strategic steps and the results you notice in their lifestyle now took time. Investing nearly always encounters bad timing, but over time my results are not good—they are outstanding. Almost inevitably, whenever I start a new portfolio relationship, market and global circumstances conspire against a smooth beginning.
Where are we now?
In my last letter, I cautioned about inflation. I was concerned that the Biden administration was incorrect but thought that perhaps—with good intentions—the administration was pouring more gasoline into the economy to provide more stimulus. I was correct; they had already done enough. It was time to let businesses and individuals find their natural footing, or what economists call equilibrium. The economy needs to find out on its own what is enough compensation, enough production, and enough housing. You cannot keep distorting the natural balance to gain electoral success every two years.
Where do we go from here?
I am confident that our long-term clients know the drill: you have seen me repeatedly produce superior portfolio returns from the quality companies we own. BUT it is not easy, and it is not in lockstep with the so-called market. I do not invest in “the market." NO!!! I seek out, and invest in, GREAT companies. Boom! We often find the 10 baggers during a market crisis. I am not hoping for economic crises or bad times, but they invariably happen—and then the very best companies shine. It is during low tide that we find those that have been swimming naked. It may be counterintuitive, but it makes a lot of sense if you think about it.
On fixed income and alternatives:
Against petty Washington politics and with great wisdom, President Biden renominated Jerome Powell to continue as the Chairman of the Federal Reserve Bank. A person attacked by both Donald Trump and Elizabeth Warren would seem to be the right person to continue to captain this nation's financial system and the world skillfully. His renomination augurs well for the economy. Just as real estate is about location, location, location, the job for the Fed Chair right now is about inflation, inflation, inflation. As the genius Charles Barkley once said, "…anything else will be uncivilized."
I was very closed to pulling the trigger on BITCOIN. Yet I stopped after sleeping on it. I've learned more about its intellectual underpinning, but my inner wisdom tells me NO!! Being smart and being wise are not the same. Until the day my heart aligns with the intellectual pull of cryptocurrency, I will NOT pull the trigger. Thank you for your trust in this matter. I take my fiduciary duty very seriously. I will continue to study this matter: if and when everything aligns, I will do it. Green energy is a clear no-brainer future winner, but I am not yet convinced regarding cryptocurrency. Maybe I am just a slow learner? If so, it is intentional.
I further explained to my new referral that in my over 30 years (yes, it is not a typo— 30 years!) of investing, we almost always start slowly when I begin investing for people. Our timing in buying into GREAT companies often seems haphazard out of the gate, BUT over time our results have been TERRIFIC.
Femi T. Shote, MSF, ChFC, CFP®
Accredited Investment Fiduciary®