My father sent me an interesting article from Hoisington Management. You can view it here, and I’d encourage you to do so. I think that the article is straightforward. Upon reading it, and seeing the conclusion, I clicked on the linked. Hoisington is a fixed income money manager. Accordingly, I would expect their opinion to be nothing other than presented.
I don’t say that to impugn the article in any way, but rather to REMIND that point of view colors the processing of all of the information that is received. (As I wrote this, I digressed into searching for ‘mental models’….I soon will own 2 books on the subject).
Provided I read these, I’m sure that I’ll write about them. I’m intrigued by the subject for the reason that inflation v. deflation, bull v. bear and any other oppositional ideas are presented in ways that seemingly require us to choose because they are presented as mutually exclusive. Is there really such a thing as elemental truths from opposing points of view that are truly mutually exclusive?
Our job then as human beings is to mine for those truths and forget the buckets. Hard to do, and I don’t pretend to be able to do that well. But this post is provoking a nascent interest in understanding it better. This blog is named The Perplexed Investor, and certainly the space between to opposing points of view is where the state of being perplexed exists.
I’m beginning to believe that being perplexed is a GOOD thing—particularly if the state of perplexion leads to discomfort. Why? The only remediation to that discomfort is to investigate and understand the issues at hand. Understanding the issues does not mean that you resolve the conflicts. However, understanding DOES mean that you are equipped to evaluate outcomes and make decisions that are appropriate for your situation. Isn’t that the only way to become COMFORTABLE (in a discomfiting way). That’s healthy dynamic tension. It means that one understands that there is uncertainty and the state of being puzzled by it means that one isn’t duped into believing that there is one clear answer thereby occulting one’s view of other possibilities. I’m listening to FSO and their military futurist guest. I will likely go hide under a rock after listening to it. (I should be concentrating on this post).
I think that one of the most dangerous periods for new investors is when they are struck by the belief (pick a style) that there is a sense of a ‘holy grail’ for investing. Buy and hold, value, contrarian, technical analysis or whatever else, are sometimes presented as seemingly holy-grails without an attendant presentation and/or understanding of the risks.
Ultimately, successful investing (living) is about managing risk and reward over a specific time horizon. And my new mantra is from Napier---in that to make money in the market, I don’t have to forecast the future accurately, only slightly better than the majority. That sounds like a hubris-infused comment, but it is not meant to be. Education, flexibility, discipline and humility are armament against hubris.