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Both cream and scum can rise to the top, unfortunately. This lower-quality stuff that's going higher isn't doing it on fundamentals.
The fact that the bond market is rallying today is a plus. If this ends up being a bear market, it will be one of the first ever that began when interest rates are down.
I always think of the economy as going down a pretty broad road that has mud on either side - for inflation and deflation. What hurts the market is when we unexpectedly swerve into one of those mud banks.
People are getting tired of being constantly on edge. Maybe that means they do let down their guard or that they're complacent. What does it take to shake that? A 5% correction? A 10% one? Those kinds of declines are unfortunately something you put up with.
There's an old line that goes, the truck you see 400 yards down the road is not the truck that hits you. When we see these problems coming, they usually get defused. Brexit may have been a surprise, but we recognized it as something that could possibly happen.
What caused 2008, in my opinion, is that people just didn't see the risk. These people that took on all this risk didn't think they had it - they thought they hedged it all away. As long as there's a perception of risk, and a culture of looking for risk, it's going to be hard to deflate us.
Both Donald Trump and the Democrats have said terrible things about the healthcare companies. If healthcare companies think they can make money in the US, the rest of the world will go along for the ride. At the end of the day, we may not like the cost of healthcare, but it's going to be pretty dang hard to contain it.
Being flexible is incredibly important. You can change your mind. I understand not wanting to flit around, jumping at something little, but you also need to ask yourself if the reasons you're in an investment are still the reasons you should be. It's hard for your ego and it's hard to call clients, but you have to do it.
I think people are complacent. But complacency is like any other metric. It's easy to measure where it is, but it's hard to tell how persistent it is. What causes really big bear markets is not just when people are overly complacent - it's when that complacency is sticky. As long as the skepticism can refresh itself, I think that the markets are still quite viable.
Be flexible. Don't be afraid to change your mind. If you're wrong, change your mind. If you go down the wrong path, and you're down 10-12%, it's better to sell down 15% versus 50%. If you have an idea that something is going to happen, you're predicting the future, and it's OK to be wrong. Where you can go wrong is by making a prediction that doesn't come true, and then sticking with it.
The other kind of market like technology is healthcare. Nobody likes the healthcare industry, but on the other hand, everyone wants to live longer. The way I look at it, there's going to be tremendous pressure with healthcare as a percentage of GDP rising with new technology, an aging population, and a business model that basically keeps people alive longer to consume more healthcare products.