Ok, so we had a big sell of last week, maybe 4% depending on what you are looking at. 4% doesn't phase me when looking at the long term and considering the future dynamism of the American economy which is not going out of business any time soon. Even looking backwards, we are still way above trend. I mean, look at a monthly chart! I even had the temerity last week to sell near-dated puts on the long end of treasury futures. In a rising rate environment that's a trade by someone with a screw loose, or maybe someone complacent, or maybe more likely: confident that it'll all work out. Basically the message is, for today, "move along there is nothing to see here."
But that is not the end of the story. The above paragraph is written by an over-confident investor. A retiree, on the other hand, sometimes looks at it a little differently. For that person, the week was not denominated in dollars or percentages, it was denominated in time. For me personally, for example, the move down represented something like two years of consumption. Divided into my remaining lifespan (a totally meaningless statistic, by the way) that's about eight percent. That did get my attention. It's been a while but every move down makes me think about portfolio longevity in the presence of consumption and the probabilities related to remaining lifespan. This is why retirement is less a single period optimal solution kind of thing and more of a process management and monitoring endeavor.
No comments:
Post a Comment