All of the above are similar in that they have achieved extreme investment success over a long period of time, have direct access to the best financial analysts and tools, and have significant resources that have been dedicated to their investment objectives.\u00a0 Who would not want to invest like the above?<\/p>\n
All are also similar as in recent months they have had significant financial losses.\u00a0 Their past success, best financial analysts, best tools, and endless resources were unable to shield them from significant investment mistakes.\u00a0 In a previous blog Scott has already mentioned the $1 billion blunder of the Canada Pension Plan as it related to their significant stake in Royal Caribbean Cruise Lines.\u00a0 Warren Buffett, through Berkshire Hathaway, announced that they exited the airline sector during the first quarter of 2020.\u00a0 I have seen analysis suggesting a $5 billion loss on their airline positions.\u00a0 Carl Icahn became a member of this prestigious group when he sold his investment in Hertz at $0.72 per share crystallizing a loss of $1.8 billion.\u00a0 Fine company indeed!<\/p>\n
Investing is not easy folks! With on-line investing you proceed at your own peril.<\/p>\n
While we at MP Wealth are obviously not Buffett, Icahn or the CPP, we do have a secret weapon that we call Pivot.\u00a0 The ultimate power of Pivot results from the fact that it does not consider the newsy market headlines.\u00a0 In today\u2019s environment the narrative de-jour is obviously, clearly, the global economic collapse and job loss devastation arising from covid-19 and the negative impact this is going to have on the stock market.\u00a0 The stock market implosion is obvious, who could think anything else, all you need to do is listen to CNN, Bloomberg or any other news media and open your eyes to the reality!\u00a0 Interestingly, that is not how this has played out so far.<\/p>\n
In the past, my biggest investment mistakes have been made when my belief in the narrative (whether positive or negative) superseded the prevailing market reality, ultimately leading to a paralyzed and incorrectly positioned approach.\u00a0 In these \u201cnarrative investment error cases\u201d, an investor effectively becomes a slave to his or her beliefs.\u00a0 Icahn believed in Hertz until he didn\u2019t, ditto for Buffett and the airlines, and the CPP and Royal Caribbean.<\/p>\n
When the market moves in line with the investment narrative you have constructed, it is natural to feel as though everything makes sense and is as it should be \u2013 things are moving up or down as expected, how could it do anything else?\u00a0 In this case, no harm is done.\u00a0 Significant harm can be done however, when you stick to your story\/narrative in the face of a market that is trending in the opposite direction.\u00a0 Make no mistake, this is the dangerous case, this is where errors lurk \u2013 this is when narrative bites back. \u00a0Thankfully, when cognitive dissonance occurs, Pivot shines.<\/p>\n
Many investors currently find themselves out of the market and not participating.\u00a0 After all, with economic data that is arguably as bad and maybe even worse than the great depression, there is just no way the market will grind higher\u2026. but it is.\u00a0 The prevailing narrative does not align and investors are missing out \u2013 danger lurks.<\/p>\n
Pivot was intentionally built to ignore narrative \u2013 to help us avoid the danger of fairy tales.\u00a0 Instead of fictions, it pays attention to the underlying health of the market by using \u201cnon-fictions\u201d which are represented by the hard data of economic measures of supply and demand (many have asked us what the measures are \u2013 I will be blunt, we are not giving away our secret sauce).\u00a0 The objective of Pivot is, and always will be, to quantitatively identify the intermediate direction of equities.\u00a0 It proved successful at the end of February when we pivoted out of equities, and again at the beginning of April when we pivoted back in.<\/p>\n
To summarize, investment narrative is most dangerous when it misaligns with current market direction and an investor stays with his or her story continuing to fight the market.\u00a0 Currently in my mind the narrative is terrible, and it seems that it is not set up for a positive market outcome.\u00a0 But, my narrative does not matter as Pivot is signaling the opposite.\u00a0 By understanding the underlying health of current market set-up, and ignoring the covid-19 narrative, we are\u00a0ensuring mandate participation in an upwardly trending market.<\/p>\n
Maybe we should give Buffet or Icahn a call and help them out.\u00a0 But I suspect they are likely to be uninterested as your MP Wealth team forges forward.\u00a0 As always, our goal is to protect capital when needed and generate stable returns in positively trending markets.<\/p>\n","protected":false},"excerpt":{"rendered":"
All of the above are similar in that they have achieved extreme investment success over a long period of time, have direct access to the best financial analysts and tools, and have significant resources that have been dedicated to their investment objectives.\u00a0 Who would not want to invest like the above? All are also similar […]<\/p>\n","protected":false},"author":43,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[14],"tags":[],"class_list":["post-343","post","type-post","status-publish","format-standard","hentry","category-commentary"],"_links":{"self":[{"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/posts\/343","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/users\/43"}],"replies":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/comments?post=343"}],"version-history":[{"count":1,"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/posts\/343\/revisions"}],"predecessor-version":[{"id":344,"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/posts\/343\/revisions\/344"}],"wp:attachment":[{"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/media?parent=343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/categories?post=343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/mpwealthadvisory\/wp-json\/wp\/v2\/tags?post=343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}