Greatest Hits: Volume 11 (When The Tide Turns)

Greatest Hits

First, you let down your guard.

Then, you become complacent.

And then, disaster strikes.

That’s certainly what it felt like on my Twitter feed this week when growth stocks started wobbling, then plummeting.

The funny thing, of course, is that they didn’t really plummet. 

Sure, some got hit harder than others. But in aggregate, as represented by the Nasdaq, tech has only come off 5% or so this week.

Over the past month, the decline was about 1% higher – and that’s before the late-week rally.

So what’s up with all the lamenting going on?

Well, to begin with, we’ve had it damn good for damn long.

In early January, I pondered just how high the stock market could go. At that point in time, the S&P was around 3,700.

At its lowest point this week, the S&P was about 4,050 – and everybody just about freaked out.

That’s right, the same folks who shouted “overpriced” when the S&P was at 2,500 last year, or 3,700 early in 2021 are now either heading for the hills or screaming “buy the dip!”.

Now, let’s be honest with ourselves.

The uptick in inflation to 4.2% could either be a temporary blip, or a sign of structural changes to come.

No one knows which one it will be.

However, what we all do know is that the only way to prosper over the long run is to hold a nicely diversified (i.e. not 100% ARK) portfolio of income-producing assets like stocks and real estate.

Once that portfolio is in place, please do yourself a favour and just let it be.

Sure, check in on it once a month (I prefer quarterly updates). But there is absolutely no need to track it on a daily (or even hourly) basis.

Trust me, both you and your finances will be much better off that way.

Happy weekend everyone – and enjoy the latest edition of Greatest Hits:

From Yours Truly

How Scared Are You?

Is Dividend Investing Worth It?

How To Get Ahead In Life

Building Wealth

Casualties Of Your Own Success – Morgan Housel

Is it time for the old guard to step aside?  The Reformed Broker introduces the new, unexpected generation of business moguls in Sorry, Not Sorry

Four Investing Lessons From David Swensen – Dollars and Data

What’s At The Bottom Of The Crypto Rabbit Hole – The Escape Artist

Is It Harder For Young People To Get Rich Today? – A Wealth Of Common Sense

Early Retirement

The Perfect Career Length – Happily Disengaged

Financial Independence Or Not, Work Will Never Stop – Accidental Fire

Finally, The Indeedably explores a new, highly effective way to FIRE: Perspective

Lifestyle Design

How To Clear Mental Space In Your Brain – Alexandra Franzen

All Around

Like him or not, but this is a stellar track record of accomplishments by someone hitting the ripe age of 38.

It also proves what I always preach on this blog: hard work is a pre-requisite, but success is ultimately about social skills:

A Real Man Of Mystery: How Ian Osborne Built a $1.5bn Venture Capital Firm – FT

And to finish it all off, some excellent books to download onto your brand new Kindle.

Recommended Books

Empire Of Pain: The Secret History Of The Sackler Dynasty – Patrick Keefe

So Good They Can’t Ignore You – Cal Newport

Shoe Dog: A Memoir By The Creator Of Nike – Phil Knight

 

Happy weekend all!

 

P.S: Attention New Bloggers:

if you are a personal finance blogger who hasn’t yet been featured on Greatest Hits, I would like to hear from you.

Please send an email to bankeronfire at gmail dot com with a blog post you would like to submit for consideration.

The key criteria for inclusion are as follows:

(i) Content that will be interesting or beneficial to the readers of this blog (I hope you will forgive me for reserving judgment on this one)

(ii) Your blog must be at least 6 months old, with regular posts. Too many bloggers flame out early, and I don’t want the readers here to follow a bunch of dead links.

I look forward to hearing from you.

 

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Banker On FIRE is a London-based M&A (mergers and acquisitions) investment banker.  I am passionate about capital markets, behavioural economics, financial independence and living the best life possible.

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4 Comments

  1. Great points about the S&P. The ups and downs really don’t matter at all if you are looking at a long time horizon of 10+ years.

    Though I did use the dip to take slightly lower gains on some high fee funds I wanted to move out of. I also decided it was time to ditch my play portfolio. It was causing me more stress than it was worth.

    Back to index and chill only for me. I’m not going to try to get fancy. It’s time to let it be.

    • To be honest, the week was so hectic that I didn’t even notice the dip until everyone started wringing their hands on Twitter!

      That’s one big advantage of having a job that keeps you busy (and also doesn’t let you trade very often)

  2. I think the 4.2% inflation is overblown. A year ago, oil prices were negative. Well… yeah no wonder there’s actual inflation data when oil prices go from negative to $66 a barrel.

    It’s what happens the next year that’s going to make the difference whether the inflation data is something to be concerned about or just something that’s expected. We still have plenty of time to evaluate.

    • I agree.

      At the end of the day, inflation is outside of our control. What we can do, however, is:
      1. Hold the right basket of income-producing investments in our portfolio
      2. Make sure our employers pay us appropriately for our efforts (the part most people fail at even in non-inflationary times!)

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