As some of you know, I purchased a 40 year old sailboat last October. Given its age I spent the spring cleaning, scrubbing and prepping so that she was ready to go when the weather improved (never would I have guessed in October that I was setting up the perfect social distancing activity for 2020). I have been fortunate enough to spend many late afternoons out on the water with my wife and son during the summer. During our sails it has taken some time to understand how to work with the rigging, the sheets (that’s what sailors call ropes!) and the various other instruments and controls. Every time we go out I learn something new, to the point now where I feel quite confident in the capabilities of the boat and my abilities to get her around the lake. Of course, without the force of the wind, all of this learning is useless. Without wind in our sails we are nothing more than a cork on the lake.
I also now officially consider myself a weather nerd. I am constantly watching forecasts and searching the wind apps on my phone so that I can catch the best possible conditions for sailing – not too flat and not too stormy. I’ve learned that steady winds blowing between 7 and 12 knots are ideal. Sort of reminds me of the story of Goldilocks and the three bears, low winds are boring and gale force winds are dangerous while the perfect winds make things exhilarating. So, the daily search continues for a wind that is “Just Right”. FYI, Thursday afternoon at 5pm looks spectacular! If all holds I will be on the lake.
As it relates to investing, finding the best conditions is what Pivot© is all about! It is worth stressing again that the objective of our process is to commit hard earned capital when the wind is at our backs, and protect that same capital when a storm is approaching. You will not find us staying invested with the rest of the industry when we are facing gale force winds!
Just as I did with my boat, though over a significantly longer period of time, we at MP Wealth have been continually prepping and fine-tuning Pivot© as we actively stress-tested the approach through numerous market ups and downs. As with any tool, the more you use it the better you are at wielding it (although that does not seem to apply to my golf clubs). In terms of Pivot©, not only have we learned how to wield it more effectively over time, we have learned and proven that its true power is its ability to find the perfect wind conditions while avoiding storms.
The news continues to shine the light on a plethora of significant issues. The US election cycle, the deployment of Federal troops to Portland (regardless of the fact that the city did not ask and does not want assistance), and unemployment significantly worse than the great financial crisis. Not to mention significant covid upticks in B.C. and exploding covid growth in the US, South America and now Africa. The markets continue to move higher ignoring the above, gobbling up the feast of central bank stimulus and the fact that we are going from downright ruinous economic conditions to something better but still terrible. Regardless of the media reports and the myriad bearish cases (keeping in mind that there are limited bullish cases) for the market to go down, Pivot© continues to signal that the markets are currently in a healthy uptrend. At some point we will need to jump ashore, just not now. Until then enjoy the wind.
You may have noticed that we have now copyrighted our Pivot© process. Watch for some exciting news in the fall!
Thanks to everyone who sent Shreddies to my office after my last post. They were much appreciated! Next time I might mention fine wines.