What to Do When You Lose the Thread (and the Personal Portfolio)
Sometimes it's hard to find a pulse. For me, this is one of those times.
Maybe it’s the mononucleosis brain fog plaguing the Misfit household for the past month, but I have a confession.
I’m struggling to understand what to do as we head into 2025.
The S&P 500 is on pace to have one of its 10 best years since the Great Depression. The Case-Shiller cyclically adjusted PE ratio for the S&P 500 is approaching the highs we saw during the dot-com bull market, and there are loads of headlines explaining this market is approaching peak investor enthusiasm.
There are plenty of reasons to explain this away. The “market” is heavily weighted to a select few of some of the most profitable companies to ever exist (is there a term for “Mag 7 plus Berkshire” yet?). Outside of these mega cap companies, valuations don’t seem nearly as stretched.
There also seems to be a prevailing thought that the incoming Trump administration will take a lighter touch toward business regulation and either extend current tax cuts or perhaps lower them further. This should, on paper, be good for profits and stock prices.
I realize I have a contrarian instinct. In the world of investing, that is typically a way of bragging. But I also acknowledge that my contrarian mindset has sometimes been a detriment to returns. I have often passed on great businesses because I thought the stock was valued too high.
Despite my efforts to suppress my “contrarian for the sake of being contrarian” instinct, I still struggle to get a good read on the market.
For someone who is supposed to deliver market and stock commentary, this isn’t a great position to be in. But, perhaps to my detriment, I would rather be honest with my views than try to shoehorn some narrative together I don’t necessarily believe.
A major mistake investors make is turning moments of paralysis into moments of panic. Lack of clarity becomes an action to " regain control.” In times like this, the better action is to not make rash decisions and to keep digging.
On to the portfolio…
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