Chicken Soup for the Underinvested Soul

Everyone is now wishing they were 100% invested in stocks.  I’m not 100% long.  You probably aren’t either.  Sure, we’re long – but is anyone “long enough” for this?

Bespoke is calling it the Zero Gravity Market:

As I survey my long positions, I find myself very much in the middle of the herd right now…tech and energy are by far the most well-represented sectors.  This is the stuff that is and has been working so perfectly, so why go out on a limb?

On the other side of the ledger, I’m still running with a decent-sized short-term bond allocation (through funds/ETFs) that can be adjusted on a dime.  I’m also holding what feels like way too much cash.  Since January 18th, most of the profits I’ve taken have not been redeployed as several signs pointed toward a time for caution.  Alas, caution has been the enemy over the first 6 weeks of 2011.

This week I spoke with three different prospective client households – three extremely smart people, well-educated and wealthy enough to have a good understanding of how the world works.  They are fully in cash and fixed income.  They thought it was the right the thing to do.

They are miserable.

They do not understand how this could be happening and they are cursing themselves for having listened to people on television or talk radio.  Worse, they are tempted to throw big money at the S&P locomotive just to make that feeling go away – just to make it stop.  I regard my responsibility with these potential clients as being to stop that from happening right away.  There needs to be some discussion about longer-term cycles and where we may be in them.

Meanwhile, the Russell 2000 (small caps) is inching to within 2% of all-time highs and large cap stocks are 15% away.

And the interest rate thing is still a freak show that will begin to be resolved shortly, it’s all unprecedented as we’ve been told 9 million times.  Just because we’re sick of hearing it doesn’t make it any less true.

So my approach to soothe the underinvested soul is to pass on “My Favorite Chart on Earth”.  It comes from The Stock Traders Almanac and I keep a copy at my desk.  You may have seen it on this site before, it’s the one that keeps me focused on the practice I’m building whenever I get bogged down in the fact that the market has essentially round-tripped since my career began in the late 90’s…

This chart may be helpful for your own head right now, it tells us a few things:

1.  There is always time to invest and get more heavily involved

2.  This secular bear cycle could still have a few years left in it after all (if 16 years is the average length of secular bears then 5 more years of range-bound activity would be the norm)

3.  The real rally, the one that breaks us away from this range, will be so powerful that missing the first 10% of it won’t mean a hill of beans.

The message here is to relax and catch your breath.  No panic and no melancholia, they won’t solve anything.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. video star transitions zoom out commented on Sep 15

    … [Trackback]

    […] Read More here to that Topic: […]

  2. blazing trader review 2020 commented on Sep 21

    … [Trackback]

    […] Find More Info here on that Topic: […]

  3. Is Bitcoin Era legitimate or not? commented on Sep 23

    … [Trackback]

    […] Read More Information here to that Topic: […]

  4. cheap ponytail wig commented on Sep 25

    … [Trackback]

    […] Find More to that Topic: […]

  5. kalpa pharma anavar commented on Nov 14

    … [Trackback]

    […] Read More on that Topic: […]

  6. easyweb td commented on Nov 26

    … [Trackback]

    […] There you will find 87868 additional Info on that Topic: […]

  7. Harold Jahn Edmonton commented on Nov 27

    … [Trackback]

    […] Find More Information here on that Topic: […]

  8. rolex replica commented on Jan 14

    … [Trackback]

    […] Read More Information here on that Topic: […]

  9. Sony Dream Machine ICF-C50 manuals commented on Jan 20

    … [Trackback]

    […] Find More to that Topic: […]