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The Best 100 Days for a Long Time

I’m on a plane right now as I write this note. It’s Easter Sunday as we fly across the country to Western Australia. It’s the first week of the Easter school holidays. We’ve never been to WA as a family, in fact, my wife nor my two boys have been before. The only memories I have of WA are from a handful of boys trips to Scarborough Beach and Northbridge from over 15 years ago and before I was married - late mornings, late nights, lots of drinking, lots of laughs, a lot of stupidity, and those speculator sunsets. Fifteen years on, I am looking forward to creating some new memories of WA - exploration, bush walks, snorkelling, go pro worthy experiences, time with my wife and two boys, and those speculator sunsets. For those of you who know me well, you know how important time away with my family is - creating lifelong memories that Google will thankfully remind me of. Its the one piece of advice I never ever forget from my clients back when I was working in my corporate days - “spend time with your children, they grow up so fast”. So I did and I am. I quite my corporate job 8 years ago and started Baharian Wealth Management. I’ve worked harder than any day in my corporate job but I have had an enormous amount of flexibility and autonomy. I regularly talk to our clients about life and their aspirations - it’s part of what we do. Not only talking about them, we help them act on it. It would be so wrong of me, and I would be doing myself a disjustice if I too didn’t clarify my own goals and act on them. So to all of you who gave me that advice 10 years ago - thank you.

Let’s get onto markets.

I'm being praised for what the market has delivered recently - all time highs. The problem I have with this kind of praise, is that I am being praised for something I had nothing to do with. The market will reward long-term investors - investors who know what game they are playing. It will also reward speculators from time to time. Speculation and reward however, is not something that can be repeated consistently and over long-periods of time. One can certainly speculate consistently and over long periods of time, whether they are rewarded for their decisions is something else.

What I did do is understand the game we play, create the system, the framework, the methodology, the policy, the protocol. I sold a way of thinking, a way of investing, a way to win over the long-run. And we’re being rewarded for it. Did I know the market was going to hit all time highs? Yes, of course I did. Did I know when? Of course not.

I don’t think I can recall a time in my career where the market has surprised investors for such a long period of time with such magnitude. Things have not only not gone as expected for many investors, but also against them. Whether it's economic or geopolitical. This doesn’t just happen at a broad market level, but with individual stocks too. How many times have you heard market experts tell us that this wasn’t supposed to happen, and that the market has it all wrong.

The opposite is also true. How many times has something unfolded better than you had expected? These situations occur just as often as the ones above, but they’re harder to remember. We justify one as skill, when things work out the way we had anticipated, and the other as bad luck, when things don’t go as we had predicted - everyone else has it wrong.

The market wasn’t supposed to be where it is today. A global pandemic, a rise in “zombie companies”, lack of breadth in the market, concentration and speculation in the tech sector, the inevitable collapse in the commercial real estate market, yet here we are - Nikkei all time high (for the first time in 30 years), Stoxx 600 all time high, S&P 500 all time high, ASX all time high, all at the same time.

How many times were you told to sell? How often did you hear a bearish point of view? How often did you feel uneasy? How many restless nights did you have? How many articles or headlines were telling you how bad it was going to be? How often were you calling your financial adviser seeking their reassurance? Only you can answer these questions. The bottom line is that we are not wired for optimism. It’s a conscious decision we make. We are hardwired for fight or flight. We fear losses twice as much as we enjoy gains.

With everything we have been told to date, the market's rally is stronger and broader than the average 100-day rally from a bottom. Let that sink in for minute.

Cycling from a rolling 100-day rate of change of less than -15% to greater than +25% has occurred only at some of the most significant inflection points in the past 60+ years. None of these points suffered anything larger than a -3.5% draw-down within the following year.

This is what I’m talking about. Data. History. Odds. The one thing that provides us with unemotional and unbiased guidance. And it's constantly evolving and changing, everyday we add more data to the history books. The one thing that never changes is the behavior of human beings. Stop investing as if you’re on another boy's trip - because you’re not, you're speculating. You have a family to take care of. They’re relying on you. They’re looking to you to provide for them, to make them feel safe, to guide them, and to support them. Stop speculating and start investing. Have a plan. Have a process. Put in place a framework, policy, and protocol. How many more hangovers do you need to go through before you realize there is a different way to enjoy life.


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