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Deep random thoughts for investors and traders

Cody Willard

Aug 1, 2012 — 2 min read

Mixed markets, with S’s over N’s meaning that the S&P 500 is stronger than the Nasdaq, meaning not much of anything.

Don’t force any trades here. Don’t scramble for performance, even if you need to make some performance up. Stay focused, stay in the game, stay flexible, and stay vigilant. Every day. For the next 3000 days, not for the next 30 days. Not if you want to make the big money and keep it.

On another note…Yesterday in the UNM Alumni Finance Committee meeting, I suggested that we consider reducing some of our portfolio’s bond/Treasury exposure, currently near 35% by 5 percentage points and to increase our cash/money market exposure from less than 2% to something closer to 7%. With Treasury rates at 60 year lows, I just don’t feel comfortable with that much exposure to bonds and Treasuries. We talked about how we are managing the Alumni endowment for the next 3000 days and not for the next 30 days. Where have you guys heard that advice before?

Most money managers want you to have your money working for you as much of the time as possible — usually because they’re paid more that way. And my mutual fund manager friends have mandates that keep their cash levels from ever going above 5%, and they’re usually working with less than half that much cash anyway. I don’t get that. As I recall, I went to nearly 90% cash in my hedge fund back in early 2007 and by the end of that year, I’d closed the fund entirely and traded stocks for TV anchoring. I don’t think you can “time the markets” in an endowment like we’re managing at the Finance Committee, but I do think we can use some historical guidance about the last two centuries of rates to sell high, and I do think we need to have more cash on hand because that would simply give us more flexibility to add strategically to other exposures and would work as a simple hedge to the rest of those exposures in the meantime.

I thought you guys would get something out of that discussion.

Funny how things look different when viewed from different time frames or playback speeds: