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The Everything Rally
This Week on The Compound
This Week on The Compound
This week on TCAF, Josh and Michael were joined by Warren Pies and Fernando Vidal co-founders of 3Fourteen Research. They discussed the everything rally, the perfect backdrop for gold, when to fade strategist price targets, overall market valuations, and why the S&P 500 isn’t the economy. (Listen)
INSIDE THE COMPOUND
Many novice investors fall into the trap of being knee-jerk contrarians. What goes up, must come down. And vice versa. Unfortunately, the financial markets don’t work that way. Trends can persist far longer than you think. Josh Brown sums up this idea below.
We are predisposed to see something making a high as being indicative of something that’s about to fall again. “What goes up must come down” is something deeply ingrained in our consciousness from birth. It has to do with the cycles we experience in life. Summer gives way to fall which leads to winter. At the peak of summer, we know instinctively that it cannot last. We impute this innate tendency of thinking over to the realm of investing where, of course, it is completely unhelpful. Yes there are cycles, no they don’t have to obey any sort of rules of perceptible time and space.
OUTSIDE THE COMPOUND
Per Benjamin Graham, one of the great advantages individual investors have is that they are not bound by the same constraints as professionals. In fact, individuals havvve no constraints, per se. The challenge is to use this to your advantage and not get sucked into the delusions of the crowd. Jason Zweig writes:
As I argue in the new edition of the book, it has never been harder to be a disciplined and independent investor. In today’s incessantly twitchy, infinitely networked markets, the siren song of smartphones, social media and streaming video can tempt you to trade more and copy the crowd.
MERCH
Future Proof 2024 saw a lot of these Hawaiian shirts on the boardwalk. They are a collaboration between The Compound and Tropical Bros. The best part is that 10% of all sales will be donated to No Kid Hungry. Use the code Summer25 for an additional discount.
COMING SOON
This week on TCAF, Josh and Michael will be joined by Jason Zweig, of the Wall Street Journal and editor of The Intelligent Investor: The Definitive Book on Value Investing (Third Edition).
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