Carty Capital Management
CFP | Fiduciary



Extreme Edginess

Good Morning,


I clicked through a bunch of the normal webpages this morning.  Home pages of all the major financial websites.  As one might expect, there was no good news.  Not even a story about firemen saving a cat from a tree.  Nothing.  Zilch.


The world is ending - again and again and again - for any number of reasons.  Take a number.


Finding something positive is like searching for a needle in a stack of needles.


The result?  I reached quickly for my mix of bourbon and bourbon in an extra large glass - with a side of TUMS (fruit-flavored) and Valium just to take the edge off.


OK, OK, I am kidding.  But you get the point.


Hey and if you really want to see how far out there some guys are - check our friend Mr. Schiff.  He has been baying at the moon for years and years.


By the way - he sells gold to his clients.  Not ETF's or stocks.  He sells the gold metal.  So while you are taking a gander at his latest post, ask yourself this, "Why would some genius like this guy be selling gold if the world is coming to an end....?"  Just a thought - but I will get back to that.


Here is his link - make sure you put all sharp objects away.  I nearly choked on my coffee from laughing so you may want to put the coffee down too.


Shift the Perspective




~the state of one's ideas, the facts known to one, in having a meaningful interrelationship:


~the faculty of seeing all the relevant data in a meaningful relationship:


~a mental view or prospect:


Since about 1984, I have suggested to all clients that our very worst enemy, the being that can do the most damage to us in the long-term journey of meeting our collective financial goals - is ourselves.  Garbage in is garbage out.


It has not changed - ever.  Sure it ebbs and flows at times and for a period all looks right - but the norm remains the norm.


Our mind, the ways we have built our human experience over centuries, has created a very sensitive machine which relishes the need to "know."  Unfortunately, the market is taught to us by Wall Street as some normally operating, logical machine which has some secret potion that only expensive Wall Street types can bestow upon you.


Instead, it is quite a different machine all together.


At any one point in time, "the market" is simply the vast culmination of billions of bits of perspective - thought - opinion, driving action.  Trillions of electrical impulses scanning across the mind of every participant.  Consider it more to be an ECG of the collection of investors at any one millisecond in time.


Add the foolishness of high-speed traders (front-runners for short) and the algo slugs - and you get a potion that reminds me every day of the final lines of WarGames:


Joshua:  "A strange game. The only winning move is not to play."


My Point?  Run your plan, your path, your goals.  Stop comparing.  It's just you.


Change your perspective.  Be bold enough to understand that "crowd think" is the enemy most of the time.  Sure it feels good.  It feels great actually.  It's much better to be on the wrong pathway if you are with a mass of people versus being on your own.


My other point?  Know this above all else:


Time is your friend - fear is your cost.


Going toe to toe with the market is about facing all of your own demons.  All are set the same way.


The Winners?


Those who choose to play the game far fewer times than most.  Those who choose to face their worst enemy the fewest number of times on the way to their goals.  Those who can be patient and stand tall in the storms that are sure to be endless.


In short....Those who choose not to play.


Which Brings us to.............


This constant need to compare results.  There will always be a sector of the market screaming forward to ever loftier highs.  There will - at the same time - be that sector which is getting clobbered with every headline, destined for the trash heap.


Think tech and retail now.


This will never change in structure - only in participating sectors.


The answer?  A few thoughts come to mind that we try to help you focus upon:


Your own portfolio should be first determined by your specific goals and timeframes as it will always be most strongly influenced by one's risk tolerance and capacity.


Know ahead of time, even the strongest are affected by the psychology of it all.  The market does not kill you - your reaction to the market does that all by itself.


Your portfolio should also be diversified. That means the portfolio should contain stocks and bonds (with exceptions of record low interest rates), as well as REIT's and even cash equivalents at times depending on needs.  All of this makes comparing your result to some non-comparable Index people chatter about, a useless effort.


Tax efficiency helps, when that can be managed, but it should never be the sole driver of gains or losses.  Low costs are important too but recognize it means we must focus on activity and turnover as fear and trading are your largest costs over a lifetime - by far.


As advisors, we focus on the fiduciary rule structure.  In the end, a myriad of elements must be simplified such that for each client, the investor’s interests are focused upon as the targeted goal over time.


The Larger View


Look, this was never meant to be easy.  We let people know that right up front.  Why?  Because assuming it is easy makes it almost certain you will jump off the ride the moment it gets difficult.


Remember:  Perspective.


Patience and a long-term understanding of the flow of an economy as a whole provides a better perspective of time.  That time can be used as your plan structure.  Properly used, time permits you to "see" risk differently.


Even so, risk is always present.  That has been the case since the moment the first investment was ever made.  It will not change.  Ever.


This bears repeating as it will come into play eventually for every investor:


Make no mistake:  history proves that fear is the investor's most significant cost in all of their investing and wealth-building goals.





And it could be sooner rather than later.  Not meant to scare but this chart above is making the rounds.


Earnings season is here and storm reactions are still out there.  A runup into overbought ranges can be settled in two ways - a pullback or flat activity overall.  Let's make sure we are ready to take advantage of either as this indicator burns off over the earnings season.


The Race is On....


The next earnings flood is headed our way.


Let's keep praying for a correction - even a mild one.   Expect some "buy the rumor, sell the news" chop as the season unfolds.


Besides, as soon as we are done with the earnings chop - The Holiday Season will be upon us!


Demographics Rule The Long-Term Game


As difficult and cumbersome as it can be to stay focused on at times, long-term currents win over time - not short-term, emotional waves.


I will use that line again from our videos:


Think Demographics, Not Economics.  We are in great shape!


Until we see you again - may your journey be grand and your legacy significant.

InvestingMike Williams