The MacroTourist

Share this post
YOU'RE DOING IT WRONG
posts.themacrotourist.com

YOU'RE DOING IT WRONG

No, you shouldn't be thinking of hedging stocks now...

Kevin Muir
Feb 27, 2020
10
4
Share this post
YOU'RE DOING IT WRONG
posts.themacrotourist.com

A couple of weeks ago, I got accused of being too pessimistic.  I was labelled a worry wart.  People tell me all the time that I don't know what I am talking about, so this is nothing new.

The reason I bring this up?  Today's post will probably elicit the same type of response that I don't understand the seriousness of the situation.

Yesterday, I had a family member ring up me up concerned about his pension accounts.  He was nervous about the stock market and was wondering what I thought.

I told him that my advice was probably not what he wanted to hear, but that selling assets as they go down because of a headline was not a good strategy.  If you are managing for the long-term, the last thing you should be doing is pitching cascading declines and chasing emotional rallies.  If anything, instead of selling stocks down here, you should be selling your bonds which have exploded higher.

This morning's decline has a panicky feel about it.  No doubt about it.  However, the time to hedge was a couple of weeks ago, not today.

Instead of selling, I would instead humbly suggest you stick to your strategy, and given the huge outperformance of bonds over stocks, it's time to rebalance back to your target weights.  Yeah, that means selling bonds and buying stocks - not the other way round!

I know it feels scary.  It feels terrible.  I am writing this at 9am as the stock market futures are plunging lower.  Part of me doesn't want to hit send because what if this is the big one?  Trading is never easy.  Yet, I have found that panicking is rarely the right trade.  

Thanks for reading,  
Kevin Muir  
the MacroTourist

PS:  If you are convinced I am wrong, please bring it up with the fellow who thought I was too much of a pessimist a couple of weeks ago.

4
Share this post
YOU'RE DOING IT WRONG
posts.themacrotourist.com
4 Comments

Create your profile

0 subscriptions will be displayed on your profile (edit)

Skip for now

Only paid subscribers can comment on this post

Already a paid subscriber? Sign in

Check your email

For your security, we need to re-authenticate you.

Click the link we sent to , or click here to sign in.

author
Kevin Muir
Feb 29, 2020Author

Kev here. Just checking out how these comments work.

Expand full comment
ReplyCollapse
1 reply
Nate Y
Mar 1, 2020

Hi Kev, great time to launch the subscription service. Looking forward to hear what positions you're putting on and the thoughts behind them.

Expand full comment
ReplyCollapse
2 more comments…
TopNewCommunity

No posts

Ready for more?

© 2022 Kevin Muir
Privacy ∙ Terms ∙ Collection notice
Publish on Substack Get the app
Substack is the home for great writing