The Middle Seat of Investing

“Oh… I get the middle seat!”
– Said no one ever. 

The middle seat sucks.

No one wants it. 

No arm rests. No space. No area to lay your head. No leg room. You’re always being bumped or elbowed by one of your neighbors. 

The only people that get them are the ones that bought their tickets late. Confirmed late. Aren’t in the million-mile club. Of just flubbed their check-in completely. It’s a consolation prize. Ya, you get to where you want to go, but you know. You were in the middle seat.

No one pays extra for the middle seat. 

The middle seat is a tax on slow movers or people who don’t fly that much. It’s something that everyone in “economy” has accepted. It’s a necessary evil. 

I’m asking because the middle seat of investing are the market crashes. It’s something no one has thought about eliminating. Big-box advisors sell the middle seat as something you just have to tolerate… like 50% falls in the market. 

What if there were only aisle and window seats…? 

Here’s my point.

People have been taught to tolerate discomfort in life where none is necessary. Corrections are fine. But crashes are not. And let me just call out diversification. Yes, it still grows your money but so does driving across the country at 25 miles an hour. It will get you there… but at what cost? 

Yes, the markets are going to fall 50% to 60% but no one should ever be surprised when they do. Especially if we are in the longest economic expansion in history. 

But people will be surprised. 

Just like they were in 2000 after 120 months of economic expansion, which at that time was the longest expansion in US history. And no one was prepared. Everyone was surprised. 

We have been taught to NOT pay attention. 

So of course there’s going to be a “crash.”

The S&P500 is at 3,000 today. My prediction is that the S&P will see 4,000 (33% increase from where it is today)  before it sees 2,500 (-17% loss from where it is today).

Which means we could see S&P 4,000 and then it will drop to S&P 2,000. This 50% drop is coming. But I believe it’s after the market goes 30ish percent higher. 

The Fed, the ECB, the Bank of Japan all want… no need, the markets to continue higher. 

Heck, look what Jerome Powell did in late December / early January with a market that didn’t even drop -20%. 

He did an about face. 

And went from saying he was going to continue on autopilot and increase the Federal Funds rate two more times in 2019… and maybe even three to having an almost 100% chance we will get a rate cut in the next few days. 

Of course this whole thing ends badly. But it doesn’t have to end badly for your money. 

And you don’t have to end up in the middle seat either. 

Just something to think about this weekend. 
And for the not-so-frequent-fliers airlines might, just maybe, be fixing the middle seat. Check out this Fast Company article about fixing the middle seat.

In Your Corner,

RCPeck-Dig Signature.JPG

RC Peck, CFP

PS – I’ve got three things for you this week…

(1) Talking Heads…
As I have started doing media appearances this year (RT American, Yahoo Finance, Cheddar TV). I liked seeing this comparison of Technical Analysts predictions vs Fundamental Analysts predictions. The red line in the Tweet below by Arun S. Chopra shows a red line representing the gains in Technicians predictions after 180 days vs. the blue line, which represents Fundamental analysis returns after 180 days (read: blue line is negative). Just saying, follow price. 

(2) Something To Ponder This Weekend…
“I will have to remember ‘I am here today to cross the swamp, not to fight all the alligators.’”
— From The Art of Possibility by Rosamund and Benjamin Zander

(3) Chart of the week…
International stocks relative to US Domestic stocks just broke to NEW lifetime lows. The US is still the place to have your money. 

(3) 100% of an investor’s problem…
If you have the right symbol then you solved [only] 10% of your problems. The other 90% is strategic and the best symbols in the world can’t save you until your brain has dumped the head trash and rewired for growth. All of this can often be solved with this conversation.