At VIA IV investments, we consider ourselves permanent owners of our assets. When we buy an asset class, we consider owning it in perpetuity (of course with periodic rebalancing to keep our risk constant).
If the market goes up or down, or if the news media makes some comments good or bad, our exposure to these assets is unchanged because they will always be part of our portfolios.
One very public example of that played out recently, with media personality James Bianco in the middle of March. He was on CNBC when the market looked really bad. He made a statement that everybody should sell everything (again, this was in March 2020).
At that time, the Dow Jones was in the low 20-thousands. Fast forward another six weeks, and Bianco came back on TV and said something to the effect of, The world has changed. The Fed has injected trillions of dollars. I now think you should buy the market. At the time of Bianco’s mea culpa the market was 30% higher than when he recommended selling in March. If one listened to James Bianco, they would have taken quite a haircut on their assets. Bianco is and was not accountable to anyone — he was on the air with the other “talking heads” who provide financial entertainment funded by the advertisers’ eyeballs, the viewers.
People who don’t consider themselves to be permanent owners are basically shortchanging themselves. In investing, doing nothing — especially in the face of big volatility — is often more profitable than chasing recent market moves. When you’re a permanent owner, you’ve accepted that you need to build a firewall between acting on the news and your permanent ownership of assets.
The moral of the story is to stick to your long-term plan. You can watch the news to be well informed, but don’t act on it. There is someone on the other side of each trade who eagerly wants to trade against you.
Jeff Holland | VIAIV