Time to Get Off the Ride

We’ve all heard the basic maxim of investing: “Buy low, sell high.” And at 228Main.com, we have talked repeatedly about the perils of buying high or selling low. Just last week we asked, “Where are you on the ride?”

It is true that buying high or selling low can easily hurt you, and to avoid acting rashly, you do need to be able to recognize where you might be in a cycle.

The flip side may be true, too: you also need to be able to make timely moves when the time is ripe. Our philosophy focuses on value investing, and we are fortunate enough that you, our clients and readers, have internalized many of these notions. (So you know that we are not talking about “timing the market.”)

So the “buy low” part is relatively easy: hunting for bargains is fun and exciting! It is easy to look at a company trading at depressed prices and imagine the possibilities, even as you know that they may not necessarily come to pass.

The other part—”sell high”—is more difficult. A holding that has treated you well can be hard to get rid of. It is easy to get greedy and let it keep riding in the hopes of further returns.

But what goes up must come down. The more inflated prices get, the less sustainable they are. When prices enter an unsustainable bubble it is wise to protect your gains by selling while the selling is good.

This does not have to be an all-or-nothing process, though. You might still believe in a company’s long-term story even if prices look unrealistically high right now, in the short term. In this case it might make sense to hedge your bets by only selling part of your holdings. This lets you pocket some gains while keeping some exposure in case of future growth.

This becomes especially important when you have a high-flying investment. If certain holdings are outperforming the rest of your portfolio, they may swell up to become oversized relative to the rest of your holdings. Over time you may find yourself with too many of your eggs in one basket; periodically rebalancing away from a hot streak can help spread your risk around.

Of course, there are no guarantees. None of these strategies are magic. But letting your investments ride with a few big winners can leave them vulnerable to a big tanking at even a hint of bad news. Heck even totally decent news can spell a crash for a hot stock that’s being held up by unrealistic growth expectations.

How do we know when it’s time to get off the ride? Clients, when you have questions or concerns about your holdings, please call or email as always.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

How to Live in Your Life

photo shows a red pencil and two options with checkboxes that read "today" and "tomorrow"

In the spring, we checked in with friends and family as work and school and much of life was in upheaval. Some folks were struggling more than others. We talked with one friend who sat through meetings in the office about how the switch to remote work was going to be handled when (not if) the team went that direction.

“I heard what they were saying, but I didn’t believe it,” our friend said. Within days, the team was out of the office. The friend was home three weeks before it finally sank in: work had gone remote.

Have you ever felt that way? Like your body has moved somewhere but your mind is refusing to catch up?

“It just feels like I’m waiting for Monday, like we’ll be back any day now,” the friend said.

The shock of change can have lots of effects on us, and we do not fault anyone going through this thought process. It made us wonder, though… What is the pandemic teaching us about time horizons?

You’ve heard this from us before: “long-term investing” is a little redundant. as we believe better chances for success lie in longer time horizons. It’s easy to outperform a strategy for short-term goals if you’re playing the long game.

2020 has been a months-long lesson in this perspective, hasn’t it? As spring turned to summer, a lot of folks had to come to grips with the idea that we could be in this situation for a while.

We are all about taking things one at a time, about taking life one day at a time—but how would our day-to-day change if we were geared toward the long term?

“I could be here a while…”

How could that phrase change your home life? Your retirement goals? Where you want to wake up each day? Your grocery and shopping routines?

Clients, what a time of change and reckoning we’re living through. But we’d like to help you do just that: live through it. Live in it.

When you’d like to talk about this or anything else, please write or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Where Are You on the Ride?

photo shows people going down a hill on a roller coaster, yelling and arms either in the air of clutching a bar

With summer fading in such a strange year, we find ourselves revisiting old memories. This will date me, but I’m thinking about the summer thrills we used to enjoy at places like Omaha’s Peony Park or Lake Okoboji’s Arnolds Park.

Part of the fun of a thrill ride is the anticipation. There’s a story and a rhythm to each ride. On a coaster, you make the climb—with a thunk-thunk-thunk on a lot of those “classic” rides!—and you can see the drop coming. Although you won’t know what they feel like until you get there, you can see the curves ahead.

And it’s all fleeting. The climb may feel like it takes forever, the terror of the drop may flash your life before your eyes… but you don’t go up and up forever, and you don’t fall down and down forever.

Sound familiar? Clients, you’ve heard us say this exact thing as a reminder about the markets.

Part of this lesson could use more attention, though: the ride can just be a ride when we know where we are on it.

When investors enjoy the climb of a hot stock, some mistakenly rush to throw everything they have at it, not recognizing that they are already near the peak: that thing will not go up and up forever. Nothing does. (Incidentally, this exuberant behavior can contribute to bubbles.)

Likewise, some get the itch to sell out when a stock cools off—but things may just be down for now and not down forever.

We don’t have a crystal ball, and we don’t have a map, but we know there are rhythms and cycles. What pain could we save ourselves by using a little perspective?

Where are we on the ride?

Clients, we’re here to help make sense of your plans and planning. Call or email when you’re ready for us.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

White-Knuckle Dreams

photo shows wooden chairs on wooden deck on a wooded lake

With decades in the financial industry, it’s been interesting to work alongside some friends and their families for years. I’ve gotten to witness many of their big milestones—and share mine, too.

Some goals have changed over time. It has happened in many different ways. Births and deaths can shift priorities. Sudden windfalls can open up opportunities and goals that once seemed unthinkable.

One quality connects a lot of the most successful goals: they stay flexible.

Is it cheating to say that a goal that changed is still a win? Well, was the birth or the death or the sudden windfall “cheating”? These questions are sort of beside the point. If life is change, a flexible mindset is the winning one.

It’s easy enough to mistake tension for focus or drive. But tense muscles don’t work as well as pliable ones. A marathon runner who cramps up, a surgeon who forgets to breathe—those are not success stories in the making.

We’ve loved getting to help clients meet those huge, lifelong dreams, of course, but there’s no romance in a dream that swallows you up. You can’t white-knuckle your way to your dreams.

We think it’s possible to set our sights high and roll with things along the way. That’s why we put so much stake in the plans and planning that go into your financial situation.

And it’s why we enjoy the work so much. Giving shape to dreams can be as thrilling as seeing them through—in fact, you can’t get there without it.

Clients, when you’re ready to talk about this or anything else, let us know.

What To Do With Your Election Portfolio

photo shows U.S> Capitol surrounded by fall trees

Elections matter, they say. People wonder what effect the outcome will have on their finances. We are getting questions and hearing concerns about this election. Perspective is needed, both from history and about our current situation.

For each president since Bill Clinton, one person or another has urgently expressed to us the need to sell all of their investments because of the ruination that was sure to follow. Folks told us that Bill Clinton, George Bush, Barack Obama, Donald Trump were all, in turn, going to herald the end of prosperity.

Yet the markets have persisted, never failing to manifest an upward trend over extended periods—with ups and downs along the way. (For perspective, the Dow Jones Industrial Average is about eight times what it was the day Clinton was elected.)

The past is no guarantee of the future, of course. But many millions of people who wake up every day and go to work in their businesses or jobs seem to have a bigger impact than the one person works as president.

We understand and appreciate government that is supportive of private enterprise, reasonable regulation, and taxes that are not excessive. Many people feel we have that in the current administration; some worry about the erosion of these things. Three points are worthy of mention right now:

  • Individual income taxes may go up no matter who wins. This was baked into the Trump tax reductions, which were written to go away after 2025. Even before the virus hit, we had record deficit spending and an unprecedented debt binge. Then programs to counter the virus increased the deficit. No matter who is president, our national finances may require fresh attention.
  • Tariffs and other trade restrictions generally depress economic growth. We have many trade restrictions now, as we did in the Depression years of the 1930s. Policy changes in this arena would likely be beneficial to our future prosperity.
  • Immigrants and the children of immigrants founded more than 40% of the Fortune 500 companies and have long been a wellspring of American vitality and prosperity. Currently, legal immigration is sharply restricted compared to past years. Restoring America to more of a destination for the best and brightest people in the world would probably be good for the economy.

Bottom line: elections seem to matter less than we think in the course of the American economy and markets. And any outcome in the current election is a mixed bag—some things will be better, some will be worse, no matter who wins. So what do we do now, to prep our portfolios?

Keep the faith; stay the course.

Clients, if you would like to talk about your holdings and the election, or anything else, please email us or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Drop Your Tools

photo shows the front of a flat, wooden raft and the rushing water in front of it

We need to cross the river. The river has its dangers, but we can’t stay here. We gather materials and fashion a raft. Perched atop, we paddle it to the other shore, where we have a decision to make.

This raft has served us so well: it helped us get to this side of the river. It is a valuable tool. Should we carry it on our backs, as we continue on land?

Just posing the question should reveal how silly it would be to drag along something we’re done with. No, of course we shouldn’t carry the raft with us.

But as humans we do this sort of thing all the time. We mistake the tool for its meaning, and we cling to what has worked in the past. We can’t drop our tools: they got us here! Where would we be without them? Who would we be without them?

That type of thinking gets people all tangled up. We’re not our choices, and we’re not our tools. (And none of this is for forever!)

In our shop, when we suggest a change of course, it may indicate that a new opportunity has become available, but sometimes it just means that an older strategy is no longer serving us. It has played itself out. And we don’t care what anybody else thinks about our strategies, either, but the meaning of our tools comes not from just having them—but from having used them.

The parable of the raft was one of the Buddha’s teachings. He implored his students to trust their own experiences and use his teachings only as they were helpful. Otherwise, drop them. No dogma, no tool for its own sake.

Trust that the proper strategy and tactics will become clear from the values and principles at the core of this adventure. No strategy, no tactic for its own sake.

Clients, when it’s time to make a change in your portfolios, when we learn something new about the world around us, we will strive to be as transparent as possible. We will share our thinking, how it has changed, and what led us to our conclusion.

When you’d like to talk about this, or anything else, write or call.