Make Investing Great Again

Hi everyone! Thanks again for reading.

In this newsletter, I plan to share at least 1-2 emails a month that help you identify potential high quality investments. Please note, most of my articles are not diving into deep due diligence and they are not meant to be financial advice, however, they are investments and/or ideas that I find compelling and may invest in.

It’s been a quiet few months, largely because there haven’t been many investments I’m genuinely excited about. Since my last post in October 2024, I’ve come across some interesting bargains, but I haven’t deployed much new capital since then.

Now, as you all know, Donald Trump is president again. In line with his campaign promises, he has announced tariffs that are already generating significant global uncertainty. Ironically, in his attempt to “make America great again,” he may instead be making investing great again. The market’s response? Sharp, rapid daily drops. Friday brought signs of indiscriminate selling, and futures suggest this may accelerate tomorrow.

Given that, we are starting to enter the best case scenario I outlined in October 2024:

“The best case: A correction or bear market arrives either broadly OR within an asset class OR at a high quality company, allowing me to put my cash and preparation into motion without delay. Of course, the best case is a broad decline as those moments typically lead to the greatest future gains, and I have a strong stomach for seeing temporary losses in my existing portfolio. Also, those broad moments also surface flaws in any portfolio to allow for better decision making in the future.

While I wait, I am hoping to also lay out a better thought out plan for what % of my cash to invest depending on the % size of a correction or bear market. Many investors that I deeply respect often have these % buckets they deploy depending on the % decline in markets, and I think it’s probably helpful in forcing myself to buy the most I possibly can. The more methodical/systemized my investing, the better. It leaves less room for emotions to take over. For example, it reduces the chances I’d wait for a correction to turn into a bear market. Sometimes, that feels like the right move when the “world is falling apart”.

Just a short update. If I get some time, I’ll share the kind of plan I come up with for investing on % declines in the market in the near future.”

Importantly, I don’t think markets are broadly undervalued today. The S&P 500 is still very expensive in my opinion, as are many of the companies within it. That said, compelling starting valuations are beginning to appear in select individual names and certain ETFs.

So instead of waiting for a perfect bottom, I’m investing in buckets. The lower the market drops, the more I’ll invest. That’s it. And if we hit a -30% to -50% drawdown? Music to my ears.

I do think the rapid nature of the drops make it difficult to see what is coming next, particularly because this is an event driven by the act of largely one person. If Trump backs down, markets may reverse bullishly quickly. If the damage is already done anyways and trade war continues to evolve from here, that bullish reversal may still end in recession and a drawn out bear market (the proper kind of bear market that is a real test of every investor’s resolve). If he does not back down, then the probability of a recession has now risen dramatically as uncertainty will eventually force consumers and businesses to pull back rapidly on investments and consumption until there is clarity.

Howard Marks offers great advice for this current paradigm shift:
”….the world economy and the world order beyond the economy, meaning geopolitics and international relationships, has been shook up like a snow globe by the events of the last days. And nobody knows what it’s going to look like. Nobody knows.

And today, whatever your forecast may be, you have to say the probability that I’m right is lower than ever. Because the probability that we know what the future is going to look like is lower than ever.”

While I always have a growing list of companies and ETFs I’d like to invest in, I need to revisit each and every company’s prospects against this kind of nonsensical disruption. If I get a chance, I’ll be sure to share some of my investment decisions.

Good luck to all!

PS Not financial advice