Michael Lipper: confessions of a vigilant holder
Buying and selling doesn't always make sense says the veteran investor who explains why being proactive can be counter-productive.
by Michael Lipper on Feb 25, 2013 at 09:29
I appear to be semi-frozen in my portfolio right now, not wanting to buy or sell significant parts of our investments.
I speak not only as a paid investment advisor who wishes to continue to be paid, but also as a steward of my family’s and personal accounts.
The continuation of payment from a long-term strategic investor has caused many advisors to make changes to portfolios look as if they are busy earning their fees.
While there are almost always chances of significant deterioration of the long-term prospects of an investment as well as newly discovered research/analysis that makes previously bypassed investments attractive, many portfolio changes are disruptive and I suspect are done merely to look busy.
In managing my own and family money as well as serving pro bono on investment committees, there is no need for me to appear to be looking as I am in action rather than observing.
Thus, these privately focused accounts are a helpful guide to my professional responsibilities.
With those thoughts in mind, I want to explore with you my current thinking about my personal rather than professional investment duties.
Where are we in the current investment cycle?
Any study of history shows that in almost any activity there is a pattern of expansion and contraction.
Even in terms of differing philosophies, they move further apart or become more concentrated in some form of a Hegelian synthesis, until there is another period of disruption of central tendencies.
Cycles are endemic to human behavior. Thus, we regularly find investment markets moving in a cyclical format.
We clearly had a market peak in 2007 and an economic/financial fall in 2008 and a stock market bottom in March 2009. Numerous commentators will use these dates to chronicle the latest expansion with comments that some stocks and some funds have risen past their 2007 highs.
The politically-oriented economists will focus on 2008 as the turning point and surviving market investors will judge performance from March 2009.
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