seasonal cycles

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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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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Wintering

photo shows sunny, snowy woods

Winter here is a demanding season—and not everyone appreciates the discipline.  

— Parker Palmer 

We talk plenty about seasons and cycles here at 228Main.com. There are useful lessons even in the most frigid of winters, literal or figurative. 

As I write this, our part of the world in southeast Nebraska is experiencing negative temperatures. The roadsides are lined with mountains of snow that have risen across the last few weeks. 

It’s hard to find the deeper meaning when even your boogers feel frozen. 

Teacher and author Parker Palmer writes about the seasons in this part of the country, like the stillness and clarity many Midwesterners can find in a snowy field. And, he explains, “Despite all appearances, of course, nature is not dead in winter—it has gone underground to renew itself and prepare for spring.” 

We spend our money differently in this season, but these needs will make way for a new focus in a few months. We keep our eyes open for the turn as challenges in certain industries give way to new opportunities.  

And as the circumstances may make it difficult to spend our time and resources exactly as we’d like to, we’ve still got one final gift of winter. It’s “the reminder that times of dormancy and deep rest are essential to all living things.” 

Clients, if you want to talk about your winter or the coming spring, please write or call. 


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Sell in May and Go Away?

© Can Stock Photo Inc. / photocreo

One popular piece of market lore revolves around the idea that virtually all of the stock market’s cumulative gains over large chunks of the past have come between November and May. The other half of the year, from May to November, has produced little in the way of gains, on average. Hence the saying, “sell in May and go away.”

There are three challenges facing anyone who seeks to act on this supposed wisdom. The first one is, any widely expected event gets discounted by the market as it gains currency with the public. If the saying works, it will get overexposed until it stops working.

The second challenge is, the statistics on which the lore rests are averages—they say nothing about what happens in any particular year, much less about what will happen this year.

The third challenge is the most interesting of all. When one examines the results of not selling in May and never going away, one wonders what more could be desired. I (Mark Leibman) was born in May 1956, when the S&P 500 Index stood at 44. As I write this, the index is 54 times higher. This calculation of a 5,300% profit excludes dividends, which would have added considerably. This tells us how not selling in May would have worked over the past nearly sixty years.

Our purpose in writing is to help you avoid being tricked by the “Sell in May” idea into a short-sighted investment decision. There are always reasons to worry about the future, developments which alarm people, and fear mongers peddling pessimism for profit. Against the dynamism and ingenuity inherent in human endeavors, these fears and worries have yet to produce a permanent downturn in the economy or the market.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss.

Indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.

Sell in May and Go Away?

One popular piece of market lore revolves around the idea that virtually all of the stock market’s cumulative gains over large chunks of the past have come between November and May. The other half of the year, from May to November, has produced little in the way of gains, on average. Hence the saying, “sell in May and go away.”

There are three challenges facing anyone who seeks to act on this supposed wisdom. The first one is, any widely expected event gets discounted by the market as it gains currency with the public. If the saying works, it will get overexposed until it stops working© Can Stock Photo Inc. / photocreo.

The second challenge is, the statistics on which the lore rests are averages—they say nothing about what happens in any particular year, much less about what will happen this year.

The third challenge is the most interesting of all. When one examines the results of not selling in May and never going away, one wonders what more could be desired. I (Mark Leibman) was born in May 1956, when the S&P 500 Index stood at 44. As I write this, the index is 47 times higher. This calculation of a 4,600% profit excludes dividends, which would have added considerably. This tells us how not selling in May would have worked over the past nearly sixty years.

Our purpose in writing is to help you avoid being tricked by the “Sell in May” idea into a short-sighted investment decision. There are always reasons to worry about the future, developments which alarm people, and fear mongers peddling pessimism for profit. Against the dynamism and ingenuity inherent in human endeavors, these fears and worries have yet to produce a permanent downturn in the economy or the market.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss.

Indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.