Long-term optimism
“I think it’s the greatest time in the history of the world to be an investor in the U.S., and overseas, if you’ve got a 10-year time horizon. You’ve got over a billion people coming out of poverty all over the world, and they’re going to buy stuff. Technology innovation also drives markets, and we’ve got more rapid technology innovation now than any time in history. We’ve learned more about health care in the last 15 years than in all of history combined. And I think the advances we’re going to see in the next 10, 20 years are going to blow everyone’s minds. Those things drive markets, they drive economies. And how any reasonable, objective person can look at that today and not have a positive long-term outlook is beyond me.”
– Peter Mallouk, CEO of money management firm Creative Planning in a 10/9/20 Barron’s interview. Read more at bit.ly/36Y6f1m.
Near-term challenges
“As I’m sure is my bias, I lean toward defense at this time. In my view, when uncertainty is high, asset prices should be low, creating high prospective returns that are compensatory. But because the Fed has set rates so low, returns are just the opposite. Thus the odds aren’t on the investor’s side, and the market is vulnerable to negative surprises.”
– Howard Marks, co-chairman of Oaktree Capital Management, in a 10/13/20 memo. Read more at bit.ly/2FwxhBO.
Fixed-cash investing
“For now — and probably for the foreseeable future — bonds can’t play their No. 1 traditional role, which is to provide a healthy stream of income. That game is over, with big implications for how we structure our portfolios and how we think about our bond holdings.”
– Jonathan Clements, in a 10/10/20 article on his Humble Dollar blog. He said in today’s low-yield environment, bonds are best seen as cash equivalents. Read more at bit.ly/358ovT4. But see also SMI’s recent article, “Forced Further Out On the Yield Curve,” at bit.ly/349m0B3.
Steady plodding
“They knew then that the assets they held, despite their prevailing prices, would someday be valued higher when the panic stopped. That unwavering faith, that obstinance amid a storm of selling, made all the difference. It’s simple but it’s not easy… Investing is about endurance and the ability to withstand large drawdowns from time to time without panicking. [Warren] Buffett says, ‘The most important quality for an investor is temperament, not intellect.’”
– Josh Brown, writing at his blog, The Reformed Broker, on 9/21/20. He referred to a March 2009 Forbes article about the huge losses Warren Buffett and Bill Gates incurred during that period’s bear market, noting that 11 years later Buffett and Gates have never been wealthier. Read more at bit.ly/340nflX.
The ultimate deferral
“Of all the benefits of tax-loss harvesting, the one that makes it irresistible is the ability to defer your future taxes to no one. That’s right, you can make your unrealized gains disappear. There’s just one catch — you have to die first.”
– Nick Maggiulli, in a 10/6/20 post on his Of Dollars and Data blog, commenting on one of the most beneficial — although perhaps least pleasant — reasons to be intentional about managing taxable investment gains and losses. Read more at bit.ly/3k43PCg.
Whatever the cost
“If they don’t like the fact that they’re still paying the same price to send Jill to Yale, they can always have Jill go to a community college… I’ve said that in a rather provocative way, right? Because they’re not going to do that.”
– David Feldman, a professor of economics at William & Mary who specializes in higher education, quoted in a 10/15/20 Forbes article about prestigious universities not cutting tuition even though the pandemic has forced many classes online. He said there will always be parents willing to pay whatever it costs for the prestige of sending their kids to a premier university. Read more at bit.ly/2Hbd7h4.
