Takeaways From 12 Years of Market Musings

As some of you may know, this will be my last regular contribution to Nasdaq.com, the end of a journey that started just over twelve years ago, on June 20, 2012. That is a long time, so hopefully readers will forgive my self-indulgence if I take time today to look back on the last dozen years and try to distill my scribblings in one piece for those of you who manage your own accounts.

I started to write Market Musings, a daily commentary and opinion piece, after a year or so of occasional contributions. Looking back, that first Market Musings piece is typical of what I have tried to do over the years: challenge conventional wisdom and encourage a logical analysis, detached from the emotion that typically surrounds investing.

In it, I wrote about the general sense of doom that was pervading commentary at the time, with everybody anticipating a collapse after a year or so of strong gains in the major stock indices. What I said then was that those gains didn’t have to end any time soon, because they were being fueled by QE; regular, massive injections of cash into the system by the Federal Reserve. 

Little did I know that that policy would still be in place a decade later, but I ended the piece with the words “don’t fight the Fed,” advice that would have served you well if you followed it, given that the S&P 500 closed that day at 1643.58 (it is currently at about 5500 as I write this).

That ably illustrated what has been the overriding theme of Market Musings over the last 12 years and the thing that I most hope readers have taken away from my musings: stay invested.

That said, I understand that when things get tough, most investors find it hard not to make some changes to their account. I have, on a few occasions, written about what to do in that situation, adding some “insurance” to your portfolio by dialing down risk in certain situations, and maybe adding things that will actually make some money on the way down, such as inverse index ETFs, but only for for a short time, and with predefined parameters. 

The main purpose of those things is to satisfy the urge to do something if stocks are falling, but to do so while staying invested for the bounce that will inevitably come at some point.

That same “stick with it” advice was repeated when it came to some individual stocks, too. I have stayed overwhelmingly bullish on a few key names over the years, for companies like Apple (AAPL), Microsoft (MSFT), Google/Alphabet (GOOG, GOOGL) and Tesla (TSLA). All of those stocks have outperformed the market during the period, despite some quite dramatic shifts in the perception of their value and their price over the years. 

Google is probably the best example of that. Back in October of 2013, when the stock was approaching what looked then like a natural top of around $1000, I wrote that investors should hang on to their holdings. After multiple subsequent splits, that $1000 price tag is equivalent to around $23. Clearly, with GOOG closing yesterday at just over $185, that would have worked out pretty well had you held. 

The point is that when a company is well-run and at the forefront of a major disruption in the economy and/or of society as a whole, don’t give in to the shifting winds of public opinion.

Then there is Bitcoin (BTC). I started writing about the cryptocurrency in 2014, and while I was skeptical at first, I soon came to see that the arguments about its inherent value were, from a trader’s or investor’s perspective, just about irrelevant. When inherently limited supply meets growing demand, the price of a traded instrument rises, and that was what was happening with Bitcoin. 

My defense of it and of the potential of the blockchain technology behind it were far more controversial then than it may seem now, leading to extreme resentment, and even a death threat, but if you bought then at around $500 and held on through the volatility, you would have done okay (it’s at about $60,000 right now, for those of you keeping score).

None of this is to say or even imply that everything I have written over the last 12 years has been gospel. Lord knows I have made my fair share of mistakes and suggested trades that would have gone wrong. What I have tried to do, though, is to educate and entertain readers, and if I have done that, then I am happy.

Before I sign off one last time, I would like to thank the editors and content managers at Nasdaq.com who have believed in me from the beginning and made this all possible. Your wisdom and insight have made me a better writer and I will always be grateful for that. Most of all, however, I would like to thank you, the reader. I suppose I could have done it without you, but it would all be a bit pointless if I had! 

Remember, question everything, do your own research, and stay invested.

Cheers,
Martin

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.