Author: Dan Plettner
Covestor models: Pure Short Opportunistic, MLP Direct Ownership, Taxable Income, Well-Intentioned Activism, Long/Short Opportunistic, Core
As the third quarter of 2011 drew to a close there was not much place to find comfort. We’ve all heard the adage that markets are ruled by fear and greed. Being greedy when others are fearful may be wise, but it doesn’t come easy. It is not human nature. As illogical as selling low and buying high sounds, such is what human emotions often trigger.
I believe that to be a good investor, one’s rational mind must be stronger than her emotional stimuli. This guarantees no short or long term success; it’s just a prerequisite in the effort to achieve that success.
My analytic mind forces me to accept discomfort. I feel pain. Pain is no excuse to abandon discipline. I choose to exercise my own discipline in my effort to provide superior returns over time.
Some of my favorite ideas have become increasingly compelling recently. In others, like Liberty All Star Growth Fund (ASG) there have actually been very clear reasons to sell.
Here in Cincinnati, I am surprised people take notice of the political banter surrounding Obama’s planned repairs of the Brent Spence Bridge connecting Ohio and Kentucky at Interstate 75/71. I’m less worried about politics than how many poor souls are going to jump off the bridge and into the river because of the decline in value of their personal fortunes.
The bigger issue than either party’s political success is the direction of the economy. Domestic games of political chicken and multi-country posturing as to the resolve of European default situations are inhibiting the economy. But politicians are politicians.
Things are bad. But things being bad is no excuse to abandon discipline. Valuations appear to me very attractive for buying. Further downside may occur, or not. Personally, I think the most likely scenario for Q4 is that we see a further fall, then rally. But I’m less inclined to worry about timing the market than trying to pick the best securities in both long and short styles to participate over time, regardless.
