Video of My 6/13/24 MoneyShow Talk
Stay calm. Own, don't trade, a portfolio of great companies. Hold plenty of cash.
MoneyShow Video
On 6/13, I had the opportunity to speak to a group of high net worth investors and family offices for my friends at MoneyShow. I have posted a video of the talk, below, for your use.
In case you are not able to watch the video, I will summarize the main points below:
As an investor, the most important thing to control is your own emotions. Stay calm. (It took me a long, long time to learn how to do this.)
That is especially difficult today because the extended fear we all experienced during the COVID pandemic has physically altered our brains to make us permanently hyper-vigilant.
Frightened people make big mistakes. We retreat into the safety of the tribe. We choose strongman leaders. We hate other tribes. The result is sustained inter-tribal social, economic, political, and military conflict—tough conditions for investors.
When thinking about the economy, focus on assets, liabilities, and net worth, not GDP. The U.S. balance sheet is in good shape.
There are two kinds of change:
smooth, gradual, near-equilibrium change, like weather systems.
Sudden, violent far-from-equilibrium change, like storm systems—tornadoes and hurricanes.
Invest for weather systems by building and owning, not trading, a portfolio of great companies for the long-term. I won’t bother to list the two dozen great companies in my portfolio because we all already know who they are.
Protect against Storm systems by holding plenty of cash—for me that’s a quarter to a third of net worth—during good times so you can buy more great companies’ shares at half price when credit crises shut down bank lending once or twice each decade.
The most-likely storm today—a financial crisis triggered by failed regional bank office building refinancings over the next year—is still a toss-up. A Fed switch to lower interest rates, if done soon, would support bank balance sheets, encourage extension of maturing loans, and avoid a full-blown credit crunch. The longer it takes the Fed to act, the greater the chances things will go wrong.
Stay invested but hang onto the cash. There may be bargains on the horizon
As always, I welcome your comments and questions. And feel free to share this with friends. Subscriptions are always free. I want to share and discuss the ideas with as many people as possible.
Thank you for addressing cash. I look at folks clamoring to buy gold with complete astonishment. Explain how you will buy food or gas or medicine with your gold bar? And just who will decide it’s value in times of crisis? Gather your friends and other tribes into a community of support, keep cash, grow food save seeds. Seeds now that’s a powerful currency with consistent and increasing value👍
Thanks for reading Sean.
Dr. John