A Farewell Letter
Dear Equity Markets of 2018,
Our relationship must come to an end. I would like to say that it’s me, not you – but this time, it’s definitely you.
Things between us started out so well, with such joy and amazement! Perhaps we were drunk on valuations, or high on tax cuts, but when you shrugged off a fit of pique in February over inflation, I started to sober up.That’s when I began to suspect you were foolishly possessed by the animal spirits you had been drinking for some time.
Then sure enough, in October, you turned on me. I knew it would happen, but I guess that things had been so good for so long, that a part of me truly believed it would last – at least for a little while longer!But you can’t seem to get along without your good friend, Certainty, who has clearly taken a holiday without letting anyone know where or how long she’ll be gone. (I’m not jealous – I like Certainty a lot, too. Just so you know).
Dealing with noisy headlines about trade and interest rates, seemingly contradicting themselves every other day, has made life difficult for you. You seem to be wandering directionless, pulled around and mostly down by the hot topic of the day. Have you forgotten about the good stuff? It’s true, the heydays may be over, but people are working, growth is still happening.If only you would look to the horizon and think longer term! Gosh, I wish you’d pick a level and settle.
I have some confessions to make. And since this is not my first rodeo (it’s actually my 31st, if counting years), none of these should surprise you:
CONFESSION #1:I have been squirreling away some of the gains we made together over time this year. You might think this is cheating, but I like to think of it as collecting happy memories of our relationship from days gone by.
CONFESSION #2: While considered by many to be unwise, I bought index put options when you weren’t looking during those glorious summer months. I know, I was betting against you – perhaps even being unfaithful.Alas, not once, but TWICE during the throes of your deep declines, I was comforted by realizing those profits.
CONFESSION #3:I’ve been spending more on bonds these days. Still battling commitment fears, my relationship with bonds has been, for the most part, short-term. You’re probably laughing or rolling your eyes at this point, because bonds are basically a bore. But guess what? I know you are aware of their gaining popularity – it’s part of the many reasons for your plunging nature of late. And that’s too bad for you. My bond friends are gradually becoming more interest-ing. In fact, I’ve even dipped my toe into more longer-term bond relationships. How’s THAT for a change? (AND I had fling with their high-yielding buddies for a bit. I ended it with them recently, although it was fun while it lasted!)
CONFESSION #4: Our tumultuous last few months have convinced me to get off that pity-party index rollercoaster, and hitch my cart to a more active approach in dealing with your volatile bulls**t. I am now woke to the very real possibility that your changeful ways will persist, and I need to be more selective in my investment choices. I may not be the cheapest date going forward, but I can assure you that I will pursue value!
CONFESSION #5:I have my sights on someone new:The 2019 Financial Markets. We haven’t met yet, but we’ve got a date on the calendar. I have hope, however thin (maybe more of a prayer, actually), that 2019 will be a really pleasant, mild mannered and uplifting experience for everyone.However, I will enter this new relationship with eyes wide open to the highly likely possibility 2019 turns out to be a cretin. Consider me very well prepared.
So, this is goodbye, Equity Markets of 2018. While I hate to see you leave, I will love to watch you go.
With gratitude for the good times,
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