Category Archives: General

Three Ways to Stay the Course and Stay Calm During All Financial Market Cycles

Many pundits tell people that timing markets is an effective way to manage market cycles. Empirical and theoretical data show otherwise. What we’ve been sending to clients and people, which seems to resonate well and is supported by financial science, are three things that we think are important when investing:

1. Trust market prices.

2. Diversify like crazy.

3. Avoid the noise.

Trust Market Prices:

Trust Market Prices means stocks are priced to give an expected return, otherwise people wouldn’t buy stocks — it also means one can’t outguess market moves. We think trusting market prices is an anxiety reducer because it allows you to stay invested at all times, good and bad. When the market is going up or at an all-time high, it’s a good time to be an investor because there is a return that’s expected. When the markets are going down, it’s still a good time to be invested because there’s still a return expected, or investors wouldn’t buy stocks. Trusting market prices is true for public security stocks across the globe supported by Nobel Prize-winning financial science, so trusting market prices is paramount.

Diversify Like Crazy:

At VIA IV, we’re not speculators. We’re not looking to gamble and maybe turn $1 into $10 — or $0 — overnight. So, if you want to invest to grow your money, diversify like crazy across countries, including the US, international markets, and emerging markets. All of these different markets have had similar returns over 30-40-year periods, but you don’t know when the returns are going to come.

Our portfolios hold in excess of 10,000 securities including large, mid, and small caps and tilt towards value stocks. Basically, you own the world, so one bad outcome in one company/industry won’t be catastrophic. The point is, by diversifying like crazy, you get a similar return with lower price fluctuations because you don’t have the risk of one company taking you out. Again, that’s supported by financial science and Nobel Prize-winning research. Harry Markowitz says, “That’s the only free lunch” in investing.

Avoid the Noise:

We think this one should be equal to the other two, but it may be more important because of what’s happening in the media today, social media, parties, cocktail parties, etc. — everybody is giving their own opinion and their opinions are already in the market. So, for the most part, these opinions have no value except they’re great anxiety provokers and ad (profit) generators for media companies. Some businesses are built on trying to get people to behave in certain ways to enhance their profits. Think tobacco, gambling, day trading, etc. Trust in financial science — don’t act upon the noise.

Do the right thing and follow financial science — your bank account and state of mind will thank you.

Jeff Holland headshot

Jeff Holland | VIAIV

The Markets are Not Broken

The markets are very competitively priced today. Lately, I’ve been hearing from clients and I tell them that bear markets are tough, they have always been temporary, not permanent, and just part of investing.

We’ve told them those things in the recent past, but there’s heightened anxiety, right now, so we still get questions like, “Well, maybe we sell now?” and, “… because everything looks really bad. The inflation numbers are higher, the housing stats are slower, the CPI is higher, interest rates are higher.” What we tell clients is that these are really, really competitive markets, and the price of stocks is based upon all known information. What moves stocks and bonds is future unknown news, like the chairman of the Fed speaking or data points being released.

Stocks are always priced to get a rate of return at that particular level, or nobody would buy them. What is important to know is that, even though the bear markets are tough, and even though the inclination is to try and get away from the pressure when you are selling a stock because you just can’t take the pressure anymore, there is somebody as equally informed as you, who is on the other side of the trade, thinking there is a return to be had in that stock.

What we say to people in these moments is, “You’re emotional now, but try, if you can, to put yourself into a more rational state and realize that there is a financial science of markets. That science states that, for every buyer, there is a seller. The press likes to say, “There are more sellers than buyers, today.” But that is not a true statement. There are no orphaned stocks because, for every seller, there is a buyer. The only reason anybody would ever buy stock, whether it’s in the United States or internationally, would be because they thought they were going to have an expected rate of return. 

So, as challenging as it is to be an investor, if you have financial science, a Nobel Prize-winning science, which we do have on our side, it becomes the north star.

Many investors invest without a plan, without science, and then it becomes incredibly hard if not impossible to succeed. We have financial science that guides us. When we talk about investing, we’re speaking about investing in cap-weighted indices, whereas most people, when they’re talking about investing, they’re talking about just buying a hodgepodge of random, single stocks — they speculate.

We think it’s important, which we have said many times before, investing is always going to have plenty of price fluctuations or volatility. It is important to know that prices are being transacted every day, to affect a future expected rate of return. With history being the only guide we have, the  “market” has basically compounded 10% annually over time, through wars, depressions, famine, etc. And with human ingenuity, there’s reason to believe that markets will continue to reward patient investors.

Markets aren’t broken, markets are working. We just don’t like the prices that are happening, but that is the reality of the world we live in. In the alternative solution, one could always go to all cash, but then the returns would be significantly lower than a portfolio of global equities.

Lastly, I’ll conclude with — Where is our market today? Prices are still higher than they were five to ten years ago. If you can keep your eye looking out five or ten years while looking back five or ten, and see where you’ve come from, it makes it a better ride. Progress is not linear. It’s not a straight line, it ebbs and flows, but stock investors have historically been rewarded.

Jeff Holland headshot

Jeff Holland | VIAIV

Bear Markets Are Tough

Bear markets are a natural part of investing in equities around the world. Bear markets are… well, nobody likes them. They’re tough, but they have always been temporary, and there’s never been a permanent loss of capital during bear markets of globally diversified portfolios. The most important thing about bear markets is to remember they’re not predictable when they begin, and you can’t predict when they’ll end. To receive a higher rate of return on your capital without investing in cash, you must always be invested in markets, and bear markets can create stress, which could create potential poor financial decisions. It’s like this demon has shown up to unsettle your mind. They seem to be at inopportune times in your life, but the reality is that any time a bear market rolls in, it’s inopportune.

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