seasonal cycles

Selling Out Is a One-Way Ticket

As we know, the markets go up and down. It’s just part of the deal! But sometimes the peaks and drops can get a little intense, so it’s worth revisiting this reality once in a while. 

The most mindful long-term investors are usually less alarmed by the bumps along the way. They know what they’ve got is basically a lifetime pass on a rollercoaster. But it’s the ride to greater potential returns, so they can keep the thrills in perspective. 

What would the alternative be, in our rollercoaster example? If you get spooked on a big drop, there’s no abandoning your seat. “Please keep your hands, arms, feet, and legs inside the vehicle while on this ride,” the announcement cautions. 

It’s best to stay in your seat, your best chance to get to the end of the ride in one piece. 

As long-term investors, we know that we can afford to let each cycle just run its course. Jumping off the ride partway through sets us up for more trouble and more work than it would ever be worth: how would we know when it’s best to jump back on? How do we know that we’ll be able to jump safely? 

We hope this is context enough to allow us to be blunt with you: long-term investing is a ticket for the whole ride, whatever that may mean. 

Selling out? Selling out is a one-way ticket out of our shop. 

Your resources are your business. Where you park your wealth is your decision, completely, and each one of us needs to do what is best for them. 

But we choose to keep at it for those who are thinking about the long haul. We believe it’s the most effective approach to a lifetime of financial wellbeing—and whatever legacy might stretch beyond your lifetime! 

Clients, we strive to communicate our values and intentions clearly. Do you need to clarify anything with us? Call or write, anytime. 

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Selling Out Is a One-Way Ticket – 228Main.com Presents: The Best of Leibman Financial Services

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On Having a Seasonal Bout of Whiplash
graphic shows a white question mark sitting on a ledge against a bright blue wall

Trying to make sense of stock moves during earnings season might make you sympathize with Elmer Fudd.

Maybe you’ve seen the classic cartoon that goes like this: Bugs Bunny and Daffy Duck, chased by the hunter Emler Fudd, start arguing over which animal Elmer is supposed to be hunting.

“Duck season!” Bugs yells.

“Rabbit season!” Daffy insists. They continue this way until Bugs seamlessly switches his response to “Rabbit season!” At this point Daffy Duck counters with the only logical response… “Duck season!”

Elmer promptly shoots his foolish prey.

And now everyone’s shouting, “Earnings season!” Each company that issues publicly-traded stock must report about its financial wellbeing quarterly. In theory, the effects of this process should be simple for investors: a company that posts a good performance should see stock gains, and a company that posts a poor performance should see stock losses. Right?

But many folks view earnings reports through the lens of their expectations. A company that does well might still seem like a disappointment to those who expected even more from it. And when a company beats consensus expectations, some investors may second-guess the showing and bet on an even bigger blowout.

Stock prices can swing wildly up and down in response to earnings reports, with less logic than the duck season, rabbit season debate. If you listen to market commentary you may hear many different (even contradictory) explanations for why a company dropped on seemingly good earnings or rose on seemingly bad earnings.

Zoom out: ten years from now, do you think you will remember what one of your stock holdings did in response to one earnings report those many years ago?

The big investment news stories worth remembering will be about bigger issues than a quarterly earnings report.

We already know stock investing involves volatility—and some of it comes around like clockwork every three months. Clients, if you are ever wondering about sudden market moves, give us a call before anybody goes daffy.

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On Having a Seasonal Bout of Whiplash – 228Main.com Presents: The Best of Leibman Financial Services

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Fast Times, Slow Times
photo shows a throttle with an image of a tortoise and an image of a hare

The past two years require some context: the fastest bear market ever then became the fastest recession ever that then became the fastest recovery ever. In fact, the S&P 500 stock index doubled from the low point faster than ever. At the start of the pandemic, with so much fear and uncertainty, the five-week drop was sharp but short.

Then things turned around.

All we had to do as investors was sit tight, rearrange things a little where we saw a chance at a bargain, and wait a short while.

Long-time clients will remember the slow times of the past, when bad weeks in the middle of bad quarters in the middle of bad years seemed to go on forever.

When account balances were lower than the year before.

When it seemed like the economy would never recover.

The human tendency is to believe that current trends or conditions will continue: it makes it difficult to keep the faith in the slow, bad times. But we know how this works, so we keep the faith despite it all. Spring comes after winter. Recovery and growth follow recessions.

The fast times we’ve had recently will inevitably slow down. The next recession, the next bad year is out there. No one knows when. Those who claim to know are so often wrong they can’t be relied upon. We find solace in knowing the tough times may bring us the bargains that make the good times good.

Clients, we will continue to rely on the principles that have served us well over the many years we’ve been at it. Looking for bargains, avoiding stampedes, seeking to own the orchard for the fruit crop. Whether trends are moving fast or slow, up or down, we seek to understand the seasons and the cycles of the market.

We cannot guarantee results, but we’ll still be here doing what we do when times change. Clients, if you would like to reminisce about the olden days or talk about the future, please email us or call.

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Fast Times, Slow Times – 228Main.com Presents: The Best of Leibman Financial Services

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Seasons and Cycles: Things Grow and Things Rest
photo shows four leaves at different point of their life (dark brown, light brown, yellow, and green)

Even in the heat of summer, I can’t help thinking about the cycles of nature—such a useful way to think about the cycles in the economy and the markets.

Winter, the fallow season, is a time for regeneration and recharging, getting ready for future growth. In spring seeds are planted and the first green shoots hint at better days ahead. Then a season of growth produces crops in a cornucopia of kinds and colors, to be harvested in the fall. Then it is time for rest and rejuvenation again.

Likewise, the economy grows and rests in turns. In recessions, excesses get corrected. Overall business activity shrinks. Resources used by businesses generally decline in price. Ultimately, a new growth cycle is spurred by the impulse to make a dollar by meeting the needs of others. Producers of goods and services prosper, until excesses create the conditions for recession again.

Unlike nature, however, the economy has a less-set schedule. The last recession was a just a two-month affair; some are two years long. Growth cycles may also be long or short. And further complicating things, some investments do well when others do poorly.

So we look for companies that have seasons of growth ahead, the best bargains we can find. For some holdings, it pays to own over extended periods, firms that dominate their sectors and will emerge from slowdowns in better a position to prosper in the future.

And when the slowdowns occur across the whole economy, we trust that, just as winter gives way to spring, the economy will find new growth after the recession. It always has, every single time in American history, although there are no guarantees about the future.

Clients, if you would like to get your portfolios in closer alignment with the seasons in the market, please email us or call.

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Seasons and Cycles: Things Grow and Things Rest – 228Main.com Presents: The Best of Leibman Financial Services

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A Luck-Proof Mindset
photo shows the question mark on the "Chance" square on a Monopoly game board

Once there was a farmer. Their horse ran away, and the neighbors cried, “What bad luck!” 

“Maybe,” said the farmer.  

The next day, the horse returned and brought with it some wild horses. The neighbors cried, “What good luck!” 

“Maybe,” said the farmer. 

The next day, the farmer’s grown child was thrown from one of the wild horses and broke their leg. “How unfortunate!” the neighbors cried. 

“Maybe,” said the farmer. 

The next day, the army came to the village to conscript all eligible individuals. The farmer’s child was passed over for their broken leg. “How fortunate!” cried the neighbors. 

“Maybe,” said the farmer. 

• • •

The Taoist parable of the farmer, relayed above, may have lessons for our experience in the market. Of course we’re interested in improving your positions over the long haul, but those twists, turns, and rumbles along the way… We don’t sweat day-to-day analysis. What we call things isn’t so important at that level, and the labels only matter when we zoom out. 

Let’s consider an example. A downturn may bring some immediate and seemingly negative impacts, right? But downturns also end up tilling the soil for future bargains. And a dip in one area inevitably sows the seeds of the next burst of progress. 

Would we ever characterize that cycle as all good or all bad? No way. Things become more relative in the long view. 

We’re certainly not suggesting that the best we hope for is a toss-up. But there’s no percentage trying to factor “good luck” or “bad luck” into our strategies and tactics. 

Instead, we can make a plan that keeps the seasons, the cycles, and the nature of change in perspective. Do we think this mindset will continue to serve us well? 

“Maybe.” 

Investing involves risk including loss of principal. 

No strategy assures success or protects against loss.

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A Luck-Proof Mindset – 228Main.com Presents: The Best of Leibman Financial Services

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Streams of Consciousness
photo shows four different driftwood fires burning on a Platte River sandbar

A pastime of mine is enjoying driftwood fires on the Platte River, just outside beautiful downtown Louisville. With the changes in the weather, a recent trip to the river got me thinking.

There’s an idea—often attributed to Greek philosopher Heraclitus—that suggests, “No one ever steps in the same river twice, for it’s not the same river, and they are not the same person.”

Each day, we experience new things. These events bring us joy, sadness, pain, elation. Some events change us by an inch. Others change us by a mile. Some changes are flighty. Others are permanent.

But we change daily.

The market has been acting like this proverbial river lately. From a distance, not much has changed. But if you look closer, you’ll see it differently. Small victories. Temporary setbacks. The ebb and flow of new information.

We have a sense of where the market is flowing. But just like an actual river, there are no guarantees (Mother Nature has her ways, right?).

As the river makes anew, it brings me more driftwood. Which allows me to continue my pastime. Which prompts me to recognize that each fire is different—and the observer is different too.

Clients, if you’d like to talk about this or anything else, email or call.

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Streams of Consciousness – 228Main.com Presents: The Best of Leibman Financial Services

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