Whenever we hear someone in the Market say that something "was so clear," or anything like it, you'll notice the verb is always conjugated in the past tense.
That's because nothing in the Market is that clear in the present.
Our decisions — both in trades and in portfolio investments — are made in the half-light.
If in the decisive moments of the Market everything were so clear, there would be no one on the other side of the book.
Only analysts and "prophets who prophesy the past" dare to say that something in the Market was very clear.
Since you liked last week's example, I'll repeat it in this letter.
At the end of the 1960s, prices had been hitting high after high, with euphoria, optimism and risk appetite at irrationally exuberant levels.
In this typical late bull-cycle scenario, the Market's sell side beat its chest and shouted things like "it's the end of value investing," "the safety of investing in stocks," "how to get rich quick," "the most experienced are obsolete," "it's time for a new methodology," "new technologies will change the Market's dynamics," "Growth! Growth! Growth!"...
Sound familiar?
At that very same moment, an experienced investor — with exceptional results, living in Omaha, and considered obsolete by some — wrote in one of his 1966 letters to partners:
Let me suggest once more that the future has never been clear to me (call us when the next few months become obvious to you — or at least the next few hours).
Well, if even Buffett makes his decisions without total clarity about the future, why on earth do you think you'll only click when everything is crystal clear?
- Is that strong bar a start bar, an exhaustion bar, or a climactic bar?
- Will Petrobras fall further or has it already hit bottom?
- Maybe I should wait for things to get clearer before making my move...
In the financial market, I often use an expression that speaks to all of this:
Blink, and you miss it!
If you want to be a Doer, you need to make decisions when everything is still foggy — and worse, while you're hearing shouts and calls from every direction.
Yes, it's pretty hard. But nobody promised you it would be easy!
Successful investing is getting people to agree with you... later. - James Grant
Until next week!
We must act in the half-light!
João Homem
