Time and Patience Are Your Portfolio's Best Friend

Time and Patience Are Your Portfolio's Best Friend. www.watchdogonwallstreet.com

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Time for a portfolio fired drill last week. Early last
week we talked about risk in one's portfolio, managing one's risk,
and you never ever ever want risk to lead to ruin.

(00:38):
Over to Thanksgiving holiday, got to see a lot of
friends and met a lot of new people, and there
everyone's picking Markowski's brain about disinvestment and that investment in
crypto and a myriad of different things. And again I
everyone looking for some sort of cookie cutter type of

(01:00):
answer and everyone's situation and I try to present this
again again everyone is unique, indifferent. Everyone's risk tolerance is different.
And I've talked about the talent philosophy, the Barbell idea
where you have this is for people that are in

(01:23):
retirement or getting close to retirement, where you have safe
assets on both sides, and then you have in the
middle some of the things you can speculate with. Was funny,
right for Thanksgiving, I did a it was like Fox
News Radio had me on to talk about this, and
the usual question from you know, a a an anchor,

(01:47):
you know, what is going to be great Trump's coming in,
what is going to be a great investment for twenty
twenty five? Again? And I had a Again she gave
me the opportunity to actually explain it's different, and I
gave the example. I say, what if you're young. You

(02:08):
could be young and you want to put money away,
But what if you're also at the same time saving
money for a house and you want to buy a
house in a year and you're looking to add to
that down payment. Should you be invested. Should you take
that money and put it into crypto? Should you put
it into the stock market if you want to buy
a house in a year, or should you have it

(02:30):
in cash and cash equivalents? You eliminate you eliminate the
effects of black swans and tail risk when you put
time on your side. And that's what people just did.
They fail to get their arms around. There's so many
different factors are involved in how you should construct a portfolio.

(02:51):
That's why there's no two portfolios at Markowski Investments that
look alike. Ten years ago, I described this as almost
like a fire drill concept. And remember back in school
when there you'd be a sitting in class and all
of a sudden wait, and you know you'd be excited

(03:13):
if you get you to escape from a test. But
you know, I was an upstate in York. Sometimes that
fire drill wild take us out in the cold. Again.
I get it, you know, I get it. You know
I got to prepare the school in case the brick
school building caught fire or whatever. Whatever you need to do,

(03:33):
the same type of thing we talk about a portfolio
fire drill. What if when if something happens, Oh, what
if there is a market event, a political event that
would send the stock market into a massive tailspin like COVID. Now, again,

(03:58):
the financial crisis wasn't a black swan because we saw
it coming. Or it could be anything, any sort of disconnect,
something might happen, war, whatever it may be. Now, if
that were to happen, I'll use myself as a guinea
pig in this. If that were to happen to me,

(04:21):
I don't care. I'm gonna be honest, it's not going
to matter. I'm not worried about that black squan or
that tail risk at this point in time, because my
time frame for the money that I'm putting away and
saving my portfolio is I'm not gonna be touching it
anytime soon. But do I have a portion of my

(04:46):
funds in cash? Sure? Absolutely, absolutely we do. There's no
doubt about it. Again, if you were someone that is
going to need to access your funds to live on,
you don't want to go to your portfolio, especially when

(05:11):
it's down, and say, what what do I have to
sell to pay bills? Never? Never, never, never never. That's
not something you want to do. And again, this is
all about managing risk. You know what ballpark, what your
bills are over the course of the month, you know

(05:34):
what money you want to have discretion, the things you
like to do. Don't you think that there should be
a period of time, period of time where you have
the you know that dollar amount in cash and cash equivalence,
you don't have to worry about those bills, or you know,

(05:54):
you could take advantage the markets go down. You might
be able to reallocate and get some more things on
the on the cheap, which is a great thing to do. Again,
this is what a portfolio fire drill is all about.
The thing that I see that many people do is they're.

Speaker 3 (06:14):
Like, well, I'm planning, I'm retiring in a year or two,
and I'm gonna need to have access at that portfolio,
and they're trying to make as much as possible up
until that point in time. And I'm saying, you're getting
close to that point in time, you have to start
shifting assets into cash and cash equivalents. A good example

(06:35):
of this again, I'll use myself as a guinea pig.
Since my kids have been born, I've been saving money
for their college education. Okay, I got one down, one
down very very shortly here as a senior in college.
But I've got three kids in college, all at the
same time. None not a dime of their college money

(06:58):
is in stocks.

Speaker 2 (07:00):
Not a dime. Why, well, guess what. I have to
have access to that money. I'm gonna have to pay
bills over the next you know, three and a half years. Now,
my youngest one is a freshman. Something goes hey wire. Okay,
I don't want their college fund to be down in
the dumps, because the market for that period of time

(07:21):
is it's going to recover, it's going to turn around.
But this is where time is important. Very important people.
When you're constructing portfolios. Again, you have to be honest
about your situation, be honest about where you're at. And
again I get it, I get it. You want I
want to make that a little bit extra money before
I retire. Well, you know what, conduct that portfolio fire

(07:44):
drill and basically see what would happen if something bad,
A black swan, something out of nowhere. Watchdog on Wall
Street dot Com