{"id":2982,"date":"2011-01-14T07:53:11","date_gmt":"2011-01-14T14:53:11","guid":{"rendered":"http:\/\/www.jasonapollovoss.local\/?p=2982"},"modified":"2018-08-16T17:15:35","modified_gmt":"2018-08-16T21:15:35","slug":"what-to-invest-in-now","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2011\/01\/14\/what-to-invest-in-now\/","title":{"rendered":"What to invest in now"},"content":{"rendered":"

As long-term readers of this blog know, I consider it contrary to my purpose to give investment advice about specific investments.\u00a0 My goal is your investment self-sufficiency.\u00a0 That is one of the reasons that I tend to comment on macro-economic data – I feel that much of the investment business does a bad job of analyzing the daily news flow.\u00a0 However, that said, that believed, that practiced, right now is an interesting moment for the financial markets.<\/span><\/p>\n

 <\/p>\n

Definitively, the Great Recession has ended.\u00a0 In data terms, it has been over for almost a year and a half.\u00a0 In psychological terms, it lingers.\u00a0 In unemployment rate terms, it lingers.\u00a0 But make no mistake, the recession is over.<\/span><\/p>\n

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Definitively, the financial markets have corrected themselves of excess valuations and now respond primarily to good economic news, not bubble era bluster and euphoria.\u00a0 This is a fantastic thing.<\/span><\/p>\n

 <\/p>\n

Now what?<\/span><\/p>\n

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The rise in value of equities has not been driven by innovation at specific businesses.\u00a0 Instead, it has been driven by a realization that an economic apocalypse is not going to happen and that businesses were oversold.\u00a0 Consequently, prices were too low.<\/span><\/p>\n

 <\/p>\n

This combination of factors is another way of saying that there is not much to focus on as an analyst of businesses.\u00a0 That is, there is not much value added potential right now for a “stock picker.”<\/span><\/p>\n

 <\/p>\n

It is difficult to see which industries or businesses are at the cutting edge but that have not yet gained the appreciation and attention of the investment community at large.\u00a0 In turn, that means that we are in a period where something very unique (at least during my career) is unfolding.\u00a0 That unique environment is an environment in which excess return cannot easily be gained by a thorough process.\u00a0 In other words, I am anticipating that a rising tide will lift almost all of the boats.<\/span><\/p>\n

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Consequently, my advice is to be very diversified with your investments right now.\u00a0 And, though I am loathe to say it, it may make sense to be invested in an index mutual fund.\u00a0 Right now there is just not much separation.\u00a0 Valuations are at about fair value relative to potential growth rates for businesses.<\/span><\/p>\n

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All of the above is a part of my intuitive process.\u00a0 But there is anecdotal evidence as well.\u00a0 Today’s Wall Street Journal ran an article<\/a> about the recent herd mentality of hedge funds.\u00a0 Hedge funds are those investors with the reputation of being super expert in stock picking.\u00a0 They are more knowledgeable.\u00a0 They are more intelligent.\u00a0 They are faster.\u00a0 They have better access to information.\u00a0 They understand that information better.\u00a0 Or so the theory goes.\u00a0 But assuming that is true, and I think, in general, it is true.\u00a0 Why would they be trading in lockstep?<\/span><\/p>\n

 <\/p>\n

The article quotes a statistic that approximately 80% of hedge funds move up and down together in value right now.\u00a0 That is a sure sign of two things:<\/span><\/p>\n

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1.\u00a0 That many of the hedge funds use similar criteria for evaluating prospective investments.<\/span><\/p>\n

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2.\u00a0 That there just isn’t that much opportunity for value ad right now given the sameness of the economic landscape right now.<\/span><\/p>\n

 <\/p>\n

Either way, and you may only ever hear me say this once, it makes sense to be invested in sameness right now.\u00a0 Unabashedly put, it seems a great time to be invested in an index mutual fund right now.<\/span><\/p>\n

 <\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

As long-term readers of this blog know, I consider it contrary to my purpose to give investment advice about specific investments.\u00a0 My goal is your investment self-sufficiency.\u00a0 That is one of the reasons that I tend to comment on macro-economic data – I feel that much of the investment business does a bad job of […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3,15],"tags":[],"class_list":["post-2982","post","type-post","status-publish","format-standard","hentry","category-the-blog","category-predictions"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2982","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=2982"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2982\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=2982"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=2982"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=2982"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}