I did a rather lengthy interview with the delightful Wally Forbes last week. It went up on the Forbes site yesterday afternoon, and is worth a read:
Here’s an excerpt
“I may have mentioned this last time we spoke. In a secular bear market, like 1966-1982 bear or the secular bear market that began in March of 2000, our primary goal is to manage risk and protect capital.
It’s kind of funny that after the 2008 collapse everybody has been mouthing those words. But, we’ve been saying that for ten years now. This is a secular bear market and you have to be very much aware of lots of volatility – strong rallies up, strong collapses down. If history is your guide, than you should expect to see five major swings from the bottom to the top and back before this whole mess is over.
Right now we’re probably on the third leg. You had the initial crash in 2000-02/03, strong rally, big crash in 2008-09, big rally and if history holds true we should see one more major correction before the secular bear market is over.
History also tells us that, typically speaking, the middle collapse is the worst of all. So the 1973-74 lows, or in our case the March 2009 low is probably the worst of the collapse. Again, understanding the broader historical patterns doesn’t change what we do day to day, but it very much colors our longer term thinking. It makes us say, “Hey, there’s probably something out there in the latter half of 2012, maybe 2013. That’s going to be the next great buying interval. That will be the next time we go 90-100% long equities.”
“Here’s the thing to keep in mind, and investors forget about this: There are keys to long-term performance, three major issues that you always have to recognize. One, you can’t have giant losses. Two, you have to keep the fee structure as modest as possible. Three, very often the less you do, the better off you are. The last one is really hard, because everybody comes into the office everyday and there’s a temptation to do something constantly. The expression, “Don’t just do something. Sit there,” really is true.”
Buy ConocoPhillips, Keep An Eye On Walmart And EMC
Barry Ritholtz, CEO and Director of Equity Research, Fusion IQ
Forbes 5/31/2012 @ 12:00PM