Time: A Thief We All Come to Know

During these turbulent times in the market, when volatility reigns supreme, measuring time is virtually impossible. How do we set a “time-post” down from which we can get our bearings?

Time: A Thief We All Come to Know

It is a very strange relationship that we have with time.

When we are young, we can’t wait to “grow up.” This is in sharp contrast to when we are older – reflecting the wrong moves that could easily have been made right if only we had the opportunity to “do it all over again.” The simple passage of time guarantees that we can not.

You might say that time is an “asset” whose value we often come to know – just as it is about run out.

During these turbulent times in the market, when volatility reigns supreme, measuring time is virtually impossible. How do we set a “time-post” down from which we can get our bearings? The investment landscape is being rewritten almost daily.

Technical analysts have a strong bias when it comes to time. For example, early pattern recognition can be very profitable.

We would call this “timely.”

However, if patterns form and stocks react accordingly, and we do not, we would call this “not in time.” So there it is – we need to be early, or we are too late.

But how does this guide us now, when the markets are gyrating like a kangaroo on a pogo stick?


We have or soon will “run out of time” when it comes to our long term waltz with the “debt devil.” It is time to choose a side.

The easy choice, and by far the most widely accepted one, is to find comfort that a problem deferred is a problem solved. Sure, this strategy has defined the last decade without any outward consequence. Exponential debt acceleration has become accepted as a modern economic “fact of life.”

All boats, from the smallest of rowboats to the largest of supertankers, have one thing in common: They can easily take on a little bit of water without sinking. Sinking only happens when the “water” overwhelms the “boat.”

Ask yourself the hard question and answer it honestly: “How much water (debt) is there in my economic boat (household)?”

Am I floating, or am I sinking?

How much “time” do I have left?

Time becomes a “thief” when we start to make financial decisions that ignore reality.

For example, the decade long marathon of financial nirvana that resulted in a quadrupling of the Dow has resulted in a degree of financial complacency that is as dangerous as it is foolish.

The best and brightest financial minds are almost cavalier in their assessment of the current market conditions. Some say, “Buy the Dip.” It has worked every time in the past.”

Hmmm, there is that word again – time.

I can think of one modern-day investor who understands time: John Paulson. Remember him? He’s the guy who bet that the value of US homes, which had gone up in value year after year after year, actually had a good chance of being worthless….turns out he was right. There was a movie made about it called “The Big Short,” based on a book by financial writer, and former Saloman Bros. bond salesman, Michael Lewis.

Another excellent reference (which took me the better part of a year to read) about the collapse of credit markets is noted below. It is an exhaustive report that is well worth reading if you have “time.”

Occam’s razor dictates that the simplest solution is often the one that is correct.

Let’s think about that for a moment.

Demographics clearly show that the “Baby Boomers,” who are retiring in great numbers, are going to stress pension plans to unimaginable limits*. Financial prudence, which would entail a mix of stocks and bonds, doesn’t seem to work as the payout from bonds deteriorates with each and every successive rate cut.

(*Ivan’s note. Perhaps we should recognize that the coronavirus COVID-19 could merely be a testing ground for a much better pandemic – in particular, one that affects the Old. Wipe out the Old, and many of these financial stresses and their ever-growing balance sheets are wiped out.”)

We need to redefine the term “reasonable return” if financial portfolios contain any appreciable allocation of bonds. (Of course, we are ignoring “junk bonds” as they do not seem like adequate choices for a retirement portfolio.)

Some say that the performance of the stock market is a “sleight of hand” due to financial engineering. Leveraged expansion with “cheap money” fueled stock buybacks resulting in higher and higher PEs and valuations. Compensation driven by stock performance has displaced compensation driven by corporate performance that included prudent stewardship.

Is it really that simple?

A runaway stock market, fuelled by a compliant FED and ignored by financial regulators, created the conditions for investors to go “all in” this time….

And now what’s left?

We have all heard the traders adage: “the escalator up and the elevator down.”

Well, the last ten years of the Dow sure looks like a very long escalator to me.

In the past few weeks, it seems like someone has pressed the elevator button, let’s wait and see…

-John Top

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