Running a Marathon, Not a Sprint
By: Tim McPartland,
When we work on this website day after day we have to remind ourselves that the investment game is about a very long term race–not about getting to the finish line next month. Our goal last year and again this year has been a 7% return–rather modest we think, but one that fits our needs and aligns with our risk tolerance.
We are convinced that big time losses that investors incur are caused by having unrealistic goals. For instance having a 7% goal, but investing in the highest yield issues they can find. These would include leveraged closed end funds and at this point in time, upstream MLP’s. If I have a goal of 7% is it wise to invest in closed end funds with current yields of 9%? Or to try to pick a bottom in a upstream MLP?
At this point in time we believe that there is extreme risk in the markets–all markets. As we have written about before Greece is flat broke–and they need to be written off and the banks and governments need to take their $370 Billion dollar writedowns. Everyone else is in a never ending qualitative easing mode. The amount of government debt globally is mind boggling. Terrorism is always a concern and no one is immune from the fallout of a major event. There is just lots of stuff going on that makes one uncomfortable. This is why we have said time and again that making a 7% goal this year will no doubt be a challenge inspite of our good start.
So with that being said we move into a new week. With any luck we will not do any buying or selling in portfolios (other than the previously mentioned bond purchase). The perfect portfolio is one in which no buying or selling needs to take place–and so far this year we haven’t done much buying or selling. We will simply be observing and waiting for opportunity.