Photo by GERARDO MR on Unsplash
When The Going Gets Tough, The Tough Get Going
When I last wrote, we were ensconced in another exogenous event, namely the military action titled “Epic Fury.” I immediately went into what I called opportunistic risk management mode. You may think that’s an oxymoron. However, under closer inspection, it makes sense. I overlay some opportunity over risk management. The mistake many people make when an exogenous event occurs is to hit the panic button and head to the hills. As my friend Jim Cramer says, “nobody ever made a dime by panicking.” Panicking leaves money on the table for someone else less risk averse to pick up.
Below is my favorite chart which I show to all prospective clients (source Telemet) and students when I was still in academia. It depicts the Standard & Poor’s 500 (SPX) for the past forty years. Sure, there were pullbacks, bear markets and exogenous events. However, in the fullness of time, markets rebounded and grew to record levels.
Chart source: Telemet
Of course, people tend to focus on the short run, which may elicit fear and sometimes action(s) detrimental to their long-term portfolio health. There were scary moments at times for the markets during Epic Fury, but you had to look beyond that, as hard as that might be. As the old saying goes. ”When the Going Gets Tough, the Tough Get Going.” Finance is not only a quantitative science, but it’s also a behavioral science.
So how did I get going? Clearly there was some air pockets that we hit in March and early April. I raised cash. First, to the extent possible, I took some losses, of which we had a few. Then I sold some positions (in whole or part) which I determined had gotten too expensive. All told, I had a healthy level of cash, or what we refer to as “dry powder” in the business.
When my criteria for a market bottom became apparent, I put money to work. I did so judiciously, initially buying some safer stocks with low volatility, such as Berkshire Hathaway Cl B (BRKB), just to get our feet wet. As time elapsed and it appeared that the war was closer to a conclusion, we sold those safe stocks and added to some preexisting positions and started some holdings in new higher Beta stocks. With that said, our April performance, to date, has been excellent. Of course, not panicking, being disciplined and equity markets roaring to new highs. In the end, we still have a greater amount of cash but remain vigilant should global matters turn for the worse.
I’m Turning 65
Five years ago, I penned a My Gut Feeling titled April 29, 2021: My Birthday Present to You in which I reminisced about my first sixty years of life. In the five years since, LakeView Asset Management has grown to new heights. My daughter Carly and brother Lonnie have joined the firm, I have been blessed with two granddaughters and have another one on the way and I’m still working long hours to help deliver superior returns to our clients. The Vegas Golden Knights won the Stanley Cup in 2023. To top it all off, I am now on Medicare, finally cashing in on all that money that I have put into the system since I was thirteen years old. To celebrate my birthday, my wife and I are taking the entire family on a trip. Hence, we will be out of the office from April 28 to May 5, but will be available should you need us, as always.
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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC did not hold any positions mentioned - although positions can change at any time. The mention of stocks are not recommendations and may not be suitable investments for your individual situation.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, (LVAM) an investment advisor representative, specializing in high-net-worth private wealth management. LVAM is a separate entity of Osaic Advisory Services, LLC, a registered investment advisor.
For more information on investing with LakeView Asset Management, LLC call us at 702-749-9343 or request more information by clicking on the contact button on the top right-hand corner of the website or by emailing Scott at scott@lakeviewasset.com or Carly at carly@lakeviewasset.com. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
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