"Slow Growth Forever" Primers
Please know that I'm not the only one to discuss the idea of slow economic growth being persistent. I'm not on a island here. And, if I am on an island, it's starting to become a pretty well populated island.
Harry Dent and William Strauss, well known demographers (as much as demographers can be well-known), have hit on the aging demographics issues for a long-time. Former U.S. Secretary of the Treasury Larry Summers has penned several articles about secular stagnation. Bill Gross, "the Bond King" has discussed the topic in his monthly letters for years. Jeremy Grantham, who has called the last two crashes, has discussed it in his quarterly letters at GMO. It's actually a relatively long list of smart people who are starting to talk about long-term slow economic growth and its impact.
One of the most recent to talk about why slow economic growth is happening, is the new Minneapolis Federal Reserve Bank President Neel Kashkari, who wrote an essay titled: Nonmonetary Problems: Diagnosing and Treating the Slow Recovery. I know that sounds dry, but it's a very good read and will help anybody wrap their head around what economic reality is. Kashkari I believe is in line to be Fed Chairman in 2018.
Here are several of my MarketWatch articles on the topic of a "slow growth forever" economy:
Understanding Slow Growth Forever
The idea of long-term slow economic growth is not original. However, it is not widely understood or accepted either. That will change over the next decade.
The classic economic formula for economic growth is: population growth + productivity growth = economic growth.
Population growth, as I analyze it, refers to both absolute population growth and the number of people moving into the middle class. As we progress further into the 21st century, we are seeing constraints on both population growth and productivity growth, so it is natural that economic growth would be slow.
There are also the complicating factors beyond the core formula for growth. We are seeing that:
- The population of the planet is getting older which results in less consumer spending as a percentage of the population.
- Technology has disrupted the labor force in a way that has not added productivity.
- Global debt is massive which is constraining new investment in the economy.
Of those three factors, only the impact of technology can be changed in any significant way.
The average age of the population is rising globally as the birth rate slows and people live longer. This impedes the economic growth rate due to the way that people spend money throughout life. People spend the most during their household formation years when they buy houses, second cars and raise children. As they get older they spend less on goods and services, other than healthcare.
There is no way to change global aging demographics in any short time frame. To make the planet younger, we would need to have a lot more babies. Even with China abandoning the one child policy, it is virtually impossible to significantly change the existing trends.
The reality is we don't really want to increase the birthrate anyway. We already have sustainability issues, as we are on track for 9 billion people by 2050, even with a slowing pace of population growth. Increasing the amount of people any faster than we are, would add even more dangerous environmental and resource problems.
I chart above shows the huge transition going on with aging demographics. At the same time that we are living longer, we are also having less children per person.
Consider how we will pay for social programs for the retired going forward with fewer younger employed people to help pay for those programs. The challenges are massive. All government economic decisions must consider this reality we face. The solutions are not simple or painless, and will not come from blind ideology.
The amount of global debt has risen far past the levels of 2007.
The massive surge of debt after the financial crisis was used to fill the hole that the "great recession" left. We can see that after 2011, the debt started to rise again and continues to rise today. While there is likely some room left for debt expansion, as the rise in life expectancy allows for that, there is not much room. We need to see the curve flatten soon and then hold for decades even as the population ages, which will be no small task.
Over the long-term, the only real way to reduce debt is to have a combination of growth, inflation and nearly balanced budgets. Eventually, the percentage of older people in the population will flatten, projected around 2050 by the World Bank and others, and then we can whittle away at the debt over a generation or two.
To solve the debt problem quicker would require massive defaults which would cause a depression or a major re-balancing of the international debt and currency markets. In the meantime, what central banks and national treasuries are doing instead, is stretching out the debt at low interest rates so it is more manageable.
Remember, governments need interest rates to remain low for a very long time in order to service their debts, so, expect interest rates to stay relatively low for a very long time. Former Federal Reserve Bank Chief Ben Bernanke a few years ago told a luncheon of hedge fund managers that he "didn't expect interest rates to normalize" in his lifetime. He's only 62.
Governments also need more inflation in order to devalue the debt, so expect higher inflation too. Federal Reserve Chair Janet Yellen has already talked about allowing the economy to "run hot" in order to create more inflation.
I talked about the weird world of low interest rates and a strong dollar on MarketWatch. It is unusual to have both a strong currency and low interest rates, however, that is what is happening. If the dollar gets too strong however, then the United States, which is the largest exporter in the world, will run itself into a recession.
The fear I have is that a series of events could return an old bogeyman. Stagflation is a very real possibility at some point. In fact, I believe it is a near certainty if we do not simply accept a GDP growth rate of 2-3%, play nice with other countries (especially China) and find ways to approach a balanced federal budget.
Improving productivity is possible, although it has stalled out in recent years. In fact, we have seen NO productivity improvement in over a year now. While it is not unusual to have a down quarter or two, a full year of no productivity improvement is rare.
If productivity growth doesn't improve significantly soon, then we have a real problem. If productivity doesn't follow the recent hiring up, and instead the lines decouple, that would potentially lead to a flat or shrinking economy (recession).
In my opinion, a few things could lead to that decoupling of the lines above.
The "biz-techies" as I have been calling them lately, seem too focused on skimming wealth from the low-end of the economy. They are focused on self-driving cabs and trucks, self-checkout at the store, robot cooks and any other way of cutting out labor that will drive money to them. That doesn't add productivity to the economy when it creates massive unemployment. All it does is divert more money to fewer people.
[I for one refuse to use self-checkout, will never be a passenger in a self-driving cab and want my chefs to be human.]
What the biz-techies should be doing is focusing on helping doctors perform better surgeries, engineers build everything on the planet better, skilled trades provide better solutions and professionals bring their work weeks from 60 hours down to 45 hours. I recently told a group of "biz-techies" that message at a local tech event. They didn't like their work ethic or ethics being challenged. I haven't been invited back.
Another complication is that businesses are not investing much (except for stock buybacks and executive pay which continue to set records). That is bad for productivity improvements as well.
Without companies investing in new employees, research and development to improve their processes, and other new projects, business stagnates. If businesses stagnate, then the economy stagnates. If the economy stagnates, then people's standard of living deteriorates.
Finally, recent corporate merger activity has been very high. This is usually a sign that employment will turn over and the unfilled jobs will no longer be available. As you can see, we have a very small window right now to avoid a near-term recession.
Perceptions and Reality
Most people don't want to hear that economic growth is going to be slow for a very long time. It is not comfortable to consider because it implies that getting ahead will be harder. Folks want to believe that things can go back to the way they were. That would be easier.
We can't go back though, at least not to the WWII to early 2000s growth rates. It won't happen no matter what some politicians promise, so think logically about what gets promised and what is realistic. We do not want to repeat the errors of the past as there is less and less safety net for recovering from a significant economic set-back.
You should know that economic growth has been around 2% for at least the past few centuries, excluding the post WWII rebuild that flowed into the technology era. 2% is not an abnormal growth rate. Unfortunately, we often only relate to the most recent history. That is a part of our psychology. We need to take a longer-term view.
Political Solutions to Slow Economic Growth
There is no solution to long-term slow economic growth. What politicians and central bankers can do however is pull growth forward. What does that mean? It means they can enact policies, usually deficit spending and tax breaks, in order to pull growth that would occur in the future, to today.
There are three massive problems with pulling growth forward. First, it leaves a hole in tomorrow's growth. That's not terribly fair to younger people, even if there are fewer of them as a percentage of the population. Another is that ballooning debt saps the personal and national financial flexibility which is necessary when the next inevitable economic slowdown occurs. Finally, pulling growth forward with various stimulus measures, almost always creates asset price bubbles. We have seen what an asset price bubble looks like twice in the past 20 years, we should try to avoid creating another.
Some politicians are finally waking up to the growing frustration in the world that slow growth is creating. The emerging populism is taking a nationalist tilt right now. Historically that has never worked out well, ask Germany. We need to think very logically and control our emotions.
As politicians, new and old, offer solutions, we the people, need to be careful not to fall for old ideas that failed in the first place. The proposals and policies we vote for and support should be along these lines (this is a quick list, each topic could be a book):
- lower deficits - which might preclude much in the way of tax cuts short-term
- tweaking the global corporate financial system to benefit more people rather than flowing wealth to fewer people
- better education and jobs training programs as those are among the only programs that yield real returns on investment
- permanent tax breaks for research and development (expire periodically now) which helps spur productivity
- redeployment of energy policy - including building a smart grid - which help provide energy security
- healthcare policy that reduces the ability of the profit motivated to gouge
- significant infrastructure investment that doesn't build "bridges to nowhere" but rather takes care of some of the decades of deferred maintenance.
That's just an "off the top of my head" list. And again, even those won't actually "cure" slow economic growth, but policies like those will mitigate the long-term impact.
There will be trade-offs of course. We will have to continue being very prudent about being the world's police as we can't afford to be everywhere. Full Social Security retirement age for the millennials needs to be raised a year or two. Babies born today probably shouldn't collect full Social Security until age 70. Social programs for able-bodied people need better ways to ween people off of public assistance.
There's more of course, but that's all the politics I have for you. What is more important to understand is that central banks and governments are going to engage in various actions to combat "slow growth forever." There is opportunity in that. If we pay attention and set ideology aside, then we can make money by understanding what those institutions are doing and why.
So, remember, always look at the bright side of life. There are ways to live and invest with slower economic growth if we manage our expectations and plan for what is coming.
The "slow growth forever" global economy is real. I've covered the evidence over the past few years and summarized in part one of this quarterly letter. Here's how I am investing in the "new normal" economic world.
Overcoming the Common Wisdom
I have a four part process for determining how to invest money. My process is not what most of the financial industry uses. Most of the financial industry uses Modern Portfolio Theory (MPT). I do not.
Modern Portfolio Theory & It's Failures
While I have talked about the failure of Modern Portfolio Theory before, it is worth briefly revisiting (entire books are written on the subject, so this will be in every way a summary).
The simple reason that I do not use Modern Portfolio Theory is because it is backward looking, and does not assess risk in real time.
According to TD Ameritrade, "MPT suggests that you can limit the volatility in your portfolio while improving its performance by spreading the risk among different types of securities that don't always behave the same way."
"One principle of investing states that the higher the risk, the higher the potential return and conversely, the lower the risk, the lower the return. According to MPT, a portfolio (a combination of individual investments) exhibits risk and return characteristics based on its composition and the way those components correlate with each other. For each level of risk, there is an "optimal" asset allocation that is designed to produce the best balance of risk versus return. An optimal portfolio will provide neither the highest returns, nor the lowest risk of all possible portfolio combinations. It will attempt to balance the lowest risk for a given level of return and the greatest return for an acceptable level of risk. This meeting point of each level of risk and reward, where optimal portfolios reside, is called the "Efficient Frontier."
"Your investment goal should be to maximize your return for the amount of risk that you are comfortable accepting. To do this, you need a properly allocated and diversified portfolio."
That sounds great. I agree with the concept of limiting risk. However, MPT has proven in the past several market cycles going back to at least the "dot.com" era and the 2008 financial crisis to be lacking at best.
My major objection to the theory is that the underlying principle about risk is clearly wrong. Higher risk does not lead to higher return potential. Higher risk almost universally leads to lower returns over time. At least two recent studies bear this out. You can read about and link to them from this article in Bloomberg: High Risk, High Returns? Not Quite.
Here's a passage from the article which describes some of the misconceptions that support MPT:
People ought to be compensated for taking risks. Higher risk should equal higher average return. But when it comes to volatility, low risk equals high return. You get paid more not to take risk! That flies in the face of everything finance theorists believe.
In fact, MPT flies in the face of everything I and almost everybody in the financial industry were taught spoonful by spoonful by bucket full as financial advisors. It also flies in the face of what most investors and regulators believe.
Here's where it gets really interesting. There is no standard model for risk that is valid. The "efficient frontier" of MPT is wrong repeatedly.
Consider that bonds are at the low-risk end of the efficient frontier spectrum, but in the two weeks after the Presidential election have lost over a trillion dollars globally. Wait! Aren't bonds supposed to be low risk?
Well, it turns out that investment risk is dependent on underlying economic factors. Only by analyzing those risk factors can we actually monitor risk. So, it turns out, that what we must do on an ongoing basis is analyze whether our investments will decrease in value when various economic risk factors manifest. It does not pay to spend much time analyzing what happens when things are good.
The cold hard truth is that MPT does not take into account current risk factors. Rather, it uses a backward looking historical context rather than a real time one. How is that helpful? Well, I'll tell you what it was used for in the next section.
In this article by Mark Arnold at Pimco, he discusses "How Modern Porftolio Theory has Failed Investors." Says Arnold, "Modern portfolio theory lacks depth in measuring portfolio risk because it does not seek to explain the underlying drivers of equity-based portfolio returns. It simply examines the historical return volatilities and correlations between stocks (or other assets) to explain how to price assets and reduce portfolio return volatility through diversification."
In other words, MPT, fails to recognize the current factors of today's economic reality. Its answer to risk, is to limit volatility. However, what we know is that risk and volatility are not one in the same. While a less volatile portfolio will feel better to some, it will not necessarily perform better. It's the actual risk that counts. Less risk lowers volatility in a portfolio, not the other way around.
Learning from the Financial Crisis
If the financial crisis of 2007-09 taught us anything, it is that sometimes, being diversified means very little. During the financial crisis, virtually every asset class fell dramatically in value. This occurred because most asset classes were very highly correlated. That is, the prices of assets moved in the same direction at the same time, and actually more importantly moved down at the same time.
The smart move to make during the financial crisis was to sell almost everything and hold cash or U.S. Treasuries, not stay diversified. Those who panicked actually did well initially by avoiding much of the downturn. However, those who panicked also mostly missed the giant rally that followed.
A better way to have handled the financial crisis would have been to be measuring risk in real time. That would have allowed an investor to miss much of the downside by selling early in the crisis and buy back early in the recovery.
Tracking real-time correlation and studying underlying risk factors is what we actually need to do, therefore, in order to mitigate investment risk. A backward looking portfolio asset allocation does very little good in a world where information moves at the speed of fiber optic.
What MPT Sells You
In my opinion, there are two real reasons that Modern Portfolio Theory endures. The first is that it helped the financial industry sell a lot of products. While mutual funds are dying a slow death, the commission loaded era of selling mutual funds was wildly profitable for the industry, even if it was mediocre at best for investors. Mutual funds were the main product of Modern Portfolio Theorists.
The second reason the financial industry sticks to MPT is that it allows an adviser to avoid liability. If he or she is essentially selling something similar, whether charging you a commission or fee, to everybody else, they are part of the crowd. If the stock market crashes, "hey, it happened to everybody" (even if it didn't, remember, there are two sides to every transaction). If the stock market rises, "hey, look how much I helped you."
The financial industry is a pretentious business in my opinion and the amount of help given, according to most studies isn't worth the cost. So, below, I am going to describe how I do things. If you don't like what I say, then take this bit of advice instead:
If you want a simple, but generally effective, long-term savings and investment plan, don't pay for ongoing investment management. Pay a good investment adviser an hourly fee for an investment plan. A good financial adviser, in my opinion, actually manages money and can use that background to help put together a "set-it and review it annually" portfolio strategy. That investment strategy will include a few super low cost index funds, possibly a sector ETF or two to focus on a long-term trend(s) and some low cost managed fixed income mutual funds (bond mutual funds, typically do better than an un-managed bond ETF segment of a portfolio). This type of approach will typically set your risk level appropriately and give you the best chance of still making a reasonable return over time.
If you choose to work with me, you must know that while I believe in a diversified asset allocation, the way to that asset allocation is not the tried and untrue method that the financial industry has been selling in my opinion. Here is my approach.
My (largely stolen) Approach to Investing in EquitiesThis method is for those looking for stock market similar returns with a little less risk than the stock market, or those who want better than the stock market returns with about the same risk. Your risk tolerance, either moderate or aggressive - you can't be in the stock market if you are conservative - is determined by your emotional make-up, time frame to needing the money to spend (10 or more years), income and other financial considerations.
If you are unwilling to take stock market risk at all, with some or all of your money, then you must accept whatever prevailing interest rates are for your returns. Also, as we mentioned before, don't get fooled into thinking that bonds are magically less risky than stocks as groups. Bonds are generally less risky in a falling interest rate environment, but pretty darn risky in a rising rate environment.
Here is my oversimplified step by step process to selecting stock market investments, including stocks and funds:
Top Down Analysis
The first thing I do is seek to understand the long-term trends and current circumstances of the global economy. This takes into account macroeconomic trends, as well as, industry trends.
Among the biggest global economic trends are global aging demographics, massive global debts, a gradual but bumpy shift to cleaner energy and technological change across most industries.
Each of these trends is interconnected with the others and have sub-trends. While we want to be the right side of these trends long-term, there will still be volatility. In any short time period, industry, government or central banks can interfere with, interrupt or improve upon these trends. Often there are unintended consequences, unseen ahead of time, that Nassim Taleb called "black swans."
The implosion of debt due to collapsing real estate prices during the financial crisis was one such black swan. Another was the collapse of the oil market from late 2014 to early 2016 due to an unexpectedly severe change to OPEC oil production.
Due to the unforeseen, we will always be at risk as the economy and markets change. That is the nature of investing. Regardless, we should look for opportunities to invest into the most persistent long-term trends as that will reduce our risk.
One of the best times to invest is after a large asset price correction due to one of these black swans or unintended consequences that drive prices down. Spring of 2009 when everybody was scared, but markets were settling was one such time. Therefore, while I will follow the biggest long-term trends, I hope to use the short-term disruptions to find opportunity for better entry prices because the lowest cost basis wins.
Identify Government and Central Bank Policy
There is no doubt we live in an age of government and central bank intervention in markets. While this has always been true, it is more true today than I can find historically in America, including after the Great Depression.
Understanding how the government and central banks intervene in the markets is vital to building an asset allocation. While we still seek to be modestly diversified, we want to focus on investing in what is getting help and avoid what is being penalized.
Governments have long favored certain industries. Which ones are getting tax breaks, or stimulus or favored regulation during a time period can give us a strong clue on where to invest.
With regard to central banks, quite a few people have discussed this, but the stock market is largely a conveyance of Federal Reserve policy. What does that mean? When the Fed has easy money policies, stocks, as well as, real estate, tend to do well. When the Fed has tighter monetary policies, stocks and real estate tend not to do well. You have heard the phrase, "don't fight the Fed?" Well, it is important to respect it.
Sometimes the government and Fed pull in the same direction, such as 2009 to 2014. Sometimes, they pull in different directions. What we know historically is that the Fed usually wins if there is a tug of war, even if the government and Fed are trying to tie.
Bottom Up Analysis
Once I have found the broad areas I want to invest in, I begin to look for value.
For stocks, I am seeking companies where the expected fundamentals will improve more than the market expects so that the share price of the stock rises. I am looking for disagreements between what the stock market has priced a stock at and what I believe it will be worth in the near future. My "near future" target is 2 to 4 years, but I allow for longer when the calendar simply disagrees for longer than I expected.
For exchange traded funds (ETFs), I am looking for entire sectors, regions of the world or asset classes that have been beaten down in price. Usually this is a cyclical occurrence and we are simply investing in anticipation of a reversion to mean.
I use value investing as a way to build a "margin of safety." By buying assets that I believe are undervalued on a repeated basis, I am less likely to own many that are overvalued due to my fallibility.
Price Trend Analysis
About a decade ago, I started to incorporate price trend following into my portfolios. What that means is that I am looking for price trends that are in my favor or giving signals of being in my favor imminently. One form of trend following is called momentum investing, another focuses on looking for price reversals. I use both.
The main reason I added a trend following component is because I know that no matter how much I read (it's a lot), I will never have all the information. And, even if I did, there is no saying I will interpret it all correctly (I've made some big mistakes). So, I use price trend following because I respect what the market is telling me.
The trend following component is supposed to help reduce risk. It doesn't always work because so many people are doing it now. There are hedge funds, high frequency traders, proprietary traders at big firms and a network of day-traders all using similar algorithms. The edge has diminished for using trend following, but it still exists because so many retail investors are still clueless.
Combined with the other three categories of analysis, price trend following has added a component that most retail investors never get the benefit of.
Early 2017 Forecast
Here is my summary early 2017 forecast in outline fashion. There are more topics to cover for sure, but these are some core issues. I will cover more topics in more detail on MarketWatch and Seeking Alpha.
We are near the end of this phase of the economic expansion. Employment additions have slowed and wages are increasing. Mergers and acquisitions have had back to back huge years. Business investment is still low and productivity has stalled.
I coined the phrase "skip-straight recession" on MarketWatch. What I mean by that is the occasional down quarter in the nation's GDP growth, but not an official recession marked by back to back down quarters. I think we stand a high probability of seeing a skip-straight recession in 2017.
Valuations are high but not in bubble territory. If we do see a down GDP quarter in 2017, then we will likely see a significant stock market correction and quite possibly a bear market with the stock market selling off 20-30%.
Corporate stock buybacks, which have been a main driver of stock prices have slowed and are not likely to pick up again until 2018. That will put downward pressure on stocks.
One factor that nobody is talking about are the Baby Boomer withdrawals from the stock market due to Required Minimum Distributions (RMDs). We are entering year 2 of that outflow of money from the markets. That means another age year of Boomers withdrawing money from the stock market. That will put more downward pressure on stocks.
The only things that will push stocks up are the potential for more foriegn buyers of stocks which is questionable, a surge in corporate earnings which is also questionable or an expansion of price to earnings ratios, in which case we then will likely enter bubble territory.
I think that interest rates will not rise much more than we have just seen. The Fed will raise the Fed Funds rate in December and maybe even in January too. However, given the "slow growth forever" economy, the Fed won't raise much. Bonds have suffered and won't do well for a while, but the brunt of the pain has already been felt in my opinion.
Donald Trump became the President-elect, despite a popular vote loss, because he convinced people in the Midwest he would help them with gainful employment. I believe his policies will stimulate the economy, but not until 2018-2019. There simply is no way to get it done faster. We should consider though that his policies will most likely be pulling growth forward from the future, not materially changing the economy permanently. Thus, we will have to deal with slow growth sometime down the road.
China is the wildcard in the U.S. economy. Their exports fell over 7% in October. That does not indicate global economic strength. If China slows, that will slow the rest of the global economy.
There is a second wildcard with China. They are our largest creditor. If there is a trade disruption or major disagreement with American due to Donald Trump's policies, then the U.S. would most likely be thrust into a recession quickly. I will discuss this in more detail on MarketWatch, but the short of it is, we are long past being able to push China around. If we force their hand, the force will come back very firmly. China has already warned the President-elect not to pull out of the Paris Climate Deal and I'm sure isn't happy about the "currency manipulator" talk or the trade rhetoric.
Europe is in bad shape. If there is a "black swan" out there independent of the U.S. I think it is there. The seeds of nationalism are popping up everywhere. Historically, nationalist movements have been very destructive. It doesn't help that Europe's economy, banks and debt structure are in various stages of disrepair.
Asset Allocation Ideas
I use an approach to asset allocation similar to what is found in Benjamin Graham's "The Intelligent Investor." Graham was Warren Buffett's mentor. If you read one book on investing, read that one. The ideas below are generic and might not suit you. Portfolios are tailored to each individual investor depending what model portfolio they are in based on their circumstances.
I am invested in natural gas stocks using the First Trust Natural Gas ETF (FCG). This sector has been beaten down for two years and is emerging right now. Donald Trump has said he will be favorable to the fossil fuel industry. OPEC is looking for ways to cap production and raise prices.
I am also invested in the Powershares QQQ ETF (QQQ) which is invested in the NASDAQ 100. This diversified fund has been a leader over most time frames. The companies in the index are among the new economy's leaders. They are at the forefront of change. One of Donald Trump's promises is to bring back money that American corporations have overseas. The companies in this index have about 80% of that money. A repatriation will be very favorable to companies like Apple (AAPL), Google (GOOG), Microsoft (MSFT) and Cisco (CSCO). I'm buying this basket of stocks on pullbacks rather than trying to trade the large cap companies.
I think there is going to be an opportunity to buy REITs and dividend stocks in 2017 on market weakness. Portfolios that generate high income help smooth the rough patches. In addition, as I stated above, I don't think interest rates go terribly higher, so dividends are far from dead. Most companies with stable dividends are inherently more stable companies.
I am a fan of India. They are young, educated and in an economic cyclical low. While I don't own much of the India ETF (INDA) yet, I anticipate sometime in 2017 I will add a bit more.
I also think we are likely to want to buy gold again sometime in 2017.
I own a dozen stocks right now and have about 50 on my "Very Short List" of companies I'd buy at the right price. Several are close, but not exhibiting the value and price trends that I want. So, I patiently wait.
My biggest individual holding right now is cash. Depending on a person's risk tolerance, I am between 25% and 50% cash. I want to reiterate, risk is high in the stock and bond markets right now because the Fed is becoming less easy, the economic cycle is aged and the new administration's growth policies won't have an impact until 2018.
That cash gives me what is called "optionality." That has nothing to do with options. It means I have cash available to buy when opportunity presents. I can strike while the iron is hot. So, either the world does better than I anticipate short-term and I can get on, or the world does what I think, which is takes a step back (not a collapse) and I can buy at cheaper prices.
To discuss more, please contact me.
My New Year's letter will be out on New Year's. This letter was late as I waited for the election results for some clarity.
Have a great Thanksgiving.