Blinded by comfort

“In recent years, the U.S. has simultaneously experienced economic growth, low inflation, expanding deficits and debt, low interest rates and rising financial markets. It’s important to recognize that these things are essentially incompatible. They generally haven’t co-existed historically, and it’s not prudent to assume they will do so in the future…. I’ve seen times in the past when people believed such an ideal state would continue in perpetuity, but it has never worked out that way.”

– Howard Marks, co-chairman of Oaktree Capital Management, in a client memo titled, “This Time It’s Different.” Read more

Bubble watch

“People love to say, ‘Those who do not learn history are doomed to repeat it.’ But another relevant truth for investors is, ‘Those who learn their history are doomed to think it’s repeating.’

– Bloomberg columnist Joe Weisenthal, in a 9/19/19 article in which he argued that investors who have been through past market crashes can be too quick to think of any appreciated asset class as being “in a bubble.” Read more

Worrying a downturn into existence

“If enough people begin to act fearfully, their anxiety can become self-fulfilling, and a recession, sometimes a big one, may follow.”

– Yale economist Robert Shiller, in a 9/12/19 New York Times article. He said when the next recession arrives, and how severe it will be, depend to a great degree on “the state of ever-changing popular narratives about the economy.” Read more

Compared to what?

“Many people have lost sight of what the real benchmark should be. That is, simply, ‘Are you on track to afford the retirement you’ve imagined?’… The goal isn’t and shouldn’t be to beat some random benchmark index that may or may not be a good comparison for your portfolio in any case.”

– Financial Advisor Ashby Daniels, in an 8/28/19 post on his Retirement Field Guide blog. For most investors, he said it’s a mistake to compare their portfolio’s returns to the S&P 500. Read more

A change of leadership

“It was as if the meek had inherited the market.”

– Barron’s reporter Ben Levisohn, in a 9/13/19 article about the returns of value stocks suddenly outpacing those of growth stocks after lagging for many years. Read more (paywall)

Don’t wait too long

“Depriving yourself of the experiences you have always dreamed of doesn’t keep the inevitable at bay.... If there is one thing I can tell clients with certainty it’s that they will never regret having those experiences, but they may deeply regret falling ill suddenly while waiting for the ‘perfect time’ to live [them].”

– Investment counselor Dina Isola, in a 9/14/19 post on her Real$martica blog. Reflecting on the 9/11 terrorist attacks that took place 18 years ago, Isola said that while planning for the future is a good thing, too much focus on the future can make us miss out on making memories with loved ones now. Read more