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.

Dr. John