If you have a high risk portfolio you should hold as much cash as you can, and if you are investing for the long-term then you should always buy with cash. What makes the best trade? Generally, you don’t trade your money.
I’m not a fan of the term ‘purchasing high and selling low’, this is the opposite of what you should be doing.
The thing was, once we hit $1 Trillion in equities and $200+ Trillion in bonds, the whole world seemed to be saying the same thing at least that, that people with some risk in their portfolios suddenly couldn’t buy the stocks anymore.
One person would start selling stocks, and another guy would buy stocks because the other guy was holding so much cash that they didn’t really need to sell. So we just kept doubling down.
The whole ‘buy and hold’ philosophy didn’t seem to change, it was just a whole lot of money was being sold when really it would be fine to hold.
When was the turning point?
Right when the dollar was at its lowest. When the Fed was raising rates and when the US economy was showing signs of slowing down.
The markets started tanking pretty quickly in 2008.
Did you do any financial risk analysis in 2008?
I had the opportunity in 2008, or early 2009. I was doing a lot of financial risk analytics on my computer, and I felt in my guts there was something that was going to turn the tide.
But my gut wasn’t telling me there was a bubble. My gut might be correct, but my gut isn’t going to tell me that the entire world is about to start collapsing at the speed of a bullet, which is what we are now seeing.
Then, in 2015 when we started to have a strong dollar, this happened.
It’s really a combination of the low interest rates which makes the markets cheaper, and the fact that the stock price, it was already at its highest point for a long time.
So a lot of people were buying shares on speculation, and people who were selling were making money because they were overleveraging to make some quick cash.
How do you see the markets’ value going forward?
I just think it will continue to go right around $100 Trillion. If you took a look at my portfolio in 2008, it would have been around $80,000, it
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