Thoughts and musings from my desk to you.

Market Optimism

I’m a cynic when it comes to the nature of humans but an optimist when it comes to the nature of markets. To be a pessimist, I would have to believe that markets are somehow doomed or that people are irredeemable. Neither is true. And when I speak of being a human nature cynic, rest assured I’m putting myself in the same category. I’m not judging people from some lofty height; I’m in the muck with all the other sinners. However, I have a unique vantage point, and by observing my own mistakes and those of so many others, I have insight into what works and what doesn’t. One of my most strongly held and loudly professed beliefs is the wild advantage of sitting still.

Expect to Bleed at the Cutting Edge

It is quite fun to try to predict the future and invest in companies in the sweet spot of your prognostications. Investing in long-term growth trends with short-term dislocations is a viable strategy, and we do this often. But finding the “next big thing” is entirely different and is fraught with pitfalls. Such positioning comes with great peril because the future is not that predictable. More importantly, it is also likely that other investors share your view already and beating you to the punch is what causes FOMO and will likely cause you to overpay.

Beware Self-Justification

We all know that market timing doesn’t work. It is a fool’s errand to sell it all, hoping to buy it back lower. But the temptation to do so is heady when the market is in decline. When the near future looks scary, it’s easy to think that perhaps selling now and buying back later is a good idea this time. Fear encourages self-justifying arguments for bad decisions by wrapping them in something else.

Segment Unveils Initiatives to Navigate Market Volatility

With almost 40 years of investing experience, Baumgarten is revealing how he applies keen knowledge and his eye for tracking the latest financial developments to Segment Wealth’s advisory practice.

Resist ESG Investing

Environmental, Social & Governance (ESG Investing) is the new popular trend in investment evaluation whereby investors use non-financial factors to screen investment options. As it gains popularity for its feel-good effects, it is currently enjoying outsized results as investors jump on the bandwagon.

Long Live Volatility

I often tell people that the best-performing investment clients have ‘faith in the future’ as their defining characteristic, and the worst-performing clients do not have that but instead, routinely give in to their fears. Are losses and chaos the “normal” state of things? Or is order and higher prices over time the “normal” state? I believe in the latter.

Predictably Irrational Investing

The field of economics has long assumed that people make decisions that optimize their own utility, and to derive the greatest benefit for themselves. However, psychological studies show that we humans do not do this, but rather we often make irrational choices, and we do so predictably. In this case, irrational investing choices.

Don't Overvalue Dividends

Gil published a piece in Advisor Perspectives entitled "Don’t Overvalue Dividends."

“My advisory firm is a big fan of stocks that pay dividends. Segment’s tax-efficient rising dividend portfolio is our most popular strategy. But if you dig into the numbers, the dividends our holdings pay are not huge. This is because we manage for total return, not maximum cash flow.

We buy stocks with a mind toward dividend sustainability and a history of payment hikes. This contrasts with normal bias toward dividend shopping, where one would simply buy the highest-yielding companies as though nothing else mattered.”

Investing is All About Perspective

As investors attempt to navigate choppy waters, we often come to realize how difficult it is to predict the future. Most tend to project today into tomorrow and more dangerously, we tend to act today based on what we feel about tomorrow.

Smart Money? Maybe. Brilliant Money. Never.

Like all industries, there is a pecking order in the investment arena, a hierarchy if you will. At the top of the financial pyramid are the hedge fund and private equity businesses.