At the beginning of this year I gave you my 2014 Market Strategy. I thought I would put myself to the test and see how I’m doing.
1) I think I am pretty good at admitting what I don’t know. I certainly did not guess that long-term bonds would be among the best performing asset classes six months into the year. Or that first-quarter economic data would look quite so dire (weather-related or not). Or that we would get a huge rebound in new home sales and home prices through the beginning of summer. I didn’t predict that the US Men’s national team would make it out of group play in the 2014 World Cup, or that a drought in Brazil would push coffee bean prices up 60% or more.
2) I’ve been better about eliminating noise. I’ve reduced who I am following on Twitter and spent less time there. I cleaned out my RSS reader to limit the number of blogs I can actually have time to read (the cream of the crop are Josh, Tadas, Bob, Ben, Cullen and Morgan). Today while on vacation in California was the first time I have turned on CNBC all year. After 2 minutes Rick Santelli came on spouting some gibberish about political motivations for changing interest rates and I quickly switched back to Wimbledon.
3) I am not reading enough offline. I have worked through a few books (Josh & Jeff’s Clash of the Financial Pundits, Cullen’s Pragmatic Capitalism, Tyler Cowen’s Average is Over, Ben Horowitz’s The Hard Thing About Hard Things and now Reza Aslan’s Zealot) but I haven’t made enough time for reading. My list is getting longer all of the time and that is something I intend to fix the second half of the year. On deck are Mauboussin’s The Success Equation and McArdle’s The Upside of Down.
4) My “learn about historical investors/markets” next book is going to be Peter Bernstein’s Against the Gods. I also worked my way through The Essays of Warren Buffet which was wonderful as expected.
For those inclined to ask, business is good. I am working with several great new clients and I couldn’t be happier about the pace and quality of this firm’s growth. Growth continues to surprise to the upside, thanks to some great press earlier this year, a great network and modest expectations on my part.
I also have a life, which is nice. I’ve been training on the mountain bike much more this summer, taking on more challenging rides and extending what I consider a “normal” day on the bike from 15 or so miles to 25+, with longer days in the 35+ mile range. And I like that. I spend time with my wife and girls every day which is a huge blessing and a miraculous result of running this firm. We’re even on a family vacation as I write this (don’t worry, it’s nap time) for the first time in a few years.
For the rest of 2014 the market will do what markets do – fluctuate. Perhaps modestly, perhaps wildly. As I commented earlier we’re getting awfully comfortable with seemingly low risk in the stock market. Eventually we’ll be reminded that high returns are our reward for riding out big swings in stock prices, but I have no idea when. Whether or not you reap the rewards that the market offers is mostly dependent on how you behave when the swings return. It depends little on your stock picking or market timing prowress. So go on, enjoy the ride, and take a few minutes to decide if how you spent the first half of this year was good for your financial, physical and overall well being.
Bason Asset Management 