Bonds are where I've made all my money since retirement. Most people think of bonds as their safety net. But over the last 5, 10, and 15 years, BND (the Vanguard total bond index) returned -0.5%, 1.3%, and 1.8% annually. You could have done a lot better.
Actually, BND didn't beat inflation. See https://schrts.co/ytfajysu My thinking changed in 2010, when I bought my first unconventional fund, PIMIX, and I never looked back. I realized there are funds and managers who can make good money with much lower volatility, which is just another way of saying a better Sharpe ratio. Add a basic understanding of how markets behave, and my system was born. It's no secret that rising rates demolish bond funds. So when inflation was running hot in early 2022 and Fed officials were openly saying they would raise rates, why were you still holding bond funds? It was the easiest time in years to be out of everything — and that's exactly what I did. The same logic applies elsewhere. Oil runs through the whole economy, from manufacturing to shipping, so when oil prices rise, inflation follows. When the Iran conflict began, wasn't it obvious oil would go up? Oil up, inflation up, rates up, bond funds down. Bogle and Buffett both preached owning just two or three funds. Buffett called diversification "protection against ignorance." I've followed that approach but have used unique bond funds. How it played out:
2010: PIMIX's risk/reward was unbelievable. Within two years it was 50% of my portfolio, and stayed there for years. It beat SPY in 2010, 2011, and 2012. https://schrts.co/TcufUNjd
2010–2018: Shifted steadily out of stocks and into bonds, until I was almost entirely in bond funds.
Jan–Nov 2022: Sat in money market, per the reasoning above.
2023–24: Bought CLOs for the first time in my life (CLOZ, HOSIX). The risk-adjusted returns made 10%+ annually an easy call. chart
April 2025: First time I've ever invested heavily in emerging market bonds, based on how they'd performed. I waited several weeks after Trump's sweeping tariff announcement. chart
The point isn't the specific funds. It's that flexibility and looking at the big picture beat holding a bond index and calling it safety.
There are really only two meaningful measures of investment success: TR(total return) and risk-adjusted return. TR includes everything (distributions too), income doesn't.
Yet there is a group of investors who are obsessed with income. Historically, income was a reasonable measure of a successful blue-chip company, particularly before the 1970s. A company that could consistently pay and grow its dividend demonstrated that it was profitable and generating real cash.
Then came the tech revolution.
Many of these companies chose to reinvest their cash in R&D, acquisitions, and buybacks rather than pay large dividends. Some paid very little or no dividend at all.
And what happened? The performance of the technology sector left many of the traditional high-income companies in the dust. Yet some investors are still drinking the income Kool-Aid, focusing on how much a company pays out rather than how much wealth it actually creates.
To me, the logical approach is simple: first look for the best total return or risk-adjusted return. Then, and only then, consider income. If a high-income investment also delivers great performance, that's a bonus. But income by itself is not a measure of investment success.
Or...
Just invest in the S&P 500 and forget about the rest.
The S&P 500 is one of the best momentum-driven indexes ever created. Ultimately, it is driven by market capitalization, which is based on stock prices. And price is the market's ultimate measure of success, regardless of what anyone says.
The higher a company's stock price goes, the larger its market capitalization becomes—and therefore, the larger its representation in the index.
You don't have to predict which companies will win. The index automatically gives more weight to the winners and less weight to the losers.
So why even try to outsmart it?
Comparison has made my life—and later, my wife’s life—much better.
I grew up in a below-average household. Whenever I thought I was poor, all I had to do was ride my bike to a poorer neighborhood. That quickly put things into perspective.
Decades later, when our portfolio had grown substantially, we still never paid much attention to keeping up with the Joneses. We always lived below our means and focused on what actually mattered to us rather than comparing ourselves with others.
Over the last several years, though, we’ve started spending a lot more. We’ve reached a point where there’s little reason to be conservative. We can’t take it with us, and our kids will still inherit plenty.
For us, comparison helped put life in perspective early on—and eventually, it also taught us when it was okay to enjoy what we had built.
My portfolio has been invested in bond OEFs since I retired in 2018.
So how did I make 11.7% annually using only bonds?
I ignored traditional bond investing and focused instead on great bond funds based on market conditions.
I have never owned individual Treasuries, CDs, or high-rated, traditional bond funds. Think BND, DODIX, etc.
I also own only 2–3 funds. I don’t diversify for the sake of diversification. As Buffett said, “Diversification is protection against ignorance.”
Another key is timing and switching several times per year. I'm a slow trader.
I look for unique market conditions and act (sell everything) when the opportunity is obvious. 2020: COVID crash. 2022: The Fed explicitly promised to raise rates rapidly. Yes, it can be done.
You don’t need to trade constantly. You need to recognize exceptional opportunities when they appear—and have the conviction to act.
Examples:
2023-4: For the first time in my life I noticed that CLO are doing great with very low SD=volatility. I loaded. See a chart https://schrts.co/wkqVVmup
2023-6: EGRIX. See the chart https://schrts.co/ZKDQzGCb
Sure, if you can stay invested in 100% stocks, you will likely earn excellent long-term returns. But most people can’t and shouldn’t do it.
I know an MD who kept 90% of his portfolio in stocks throughout his entire life. At one point during retirement, he had $10 million and lost $3 million in a market downturn. He didn’t care. He had more than enough money and was comfortable with the risk.
That’s the key point: the right level of risk depends on how much money you have and how much you need—not just on expected returns. Most workers don't have a pension, a large inheritance, a stable high-paying job for decades, or millions already saved. They simply can't afford the risk of a major market decline when they approach retirement.
When I retired, my portfolio was more than 25 times our annual expenses. Based on our spending and assets, we should have no problem funding our lifestyle through age 100. So why in the world would I risk that security by going 100% stocks? For me, the goal isn't to maximize returns. It's to have more than enough money while taking as little risk as necessary. BTW, I still manage to make 11.7% annually since 2018 using 95% in bond OEFs and hardly losing from any last top.
Fortunately, I know several successful investors personally.
We’re a group of slow traders who invest in what is currently working and select funds—not individual stocks—with strong risk-adjusted performance. We’ve been doing this for more than 20 years. We don’t use leverage, and we’re slow traders.
Sure, buy and hold is a perfectly reasonable strategy. But here’s the question: What funds—no annuities or other insurance products—would you use for a retiree who wants to earn an average of 9-10% annually while never losing more than 10% from any last top? You can’t do it with buy-and-hold. There is no fund or conventional portfolio that can reliably deliver that combination of return and downside protection. If you want both, you need to be willing to adapt.
Two observations:
Many investors in this forum hold the S&P 500 or a total stock market index for decades. They don't own single stocks and switch, so they don’t realize taxable capital gains along the way.
Second, when you pass away, assets held in a taxable account generally receive a step-up in cost basis for your heirs, subject to the applicable tax rules.
Both strategies can be very effective for minimizing taxes over your lifetime and potentially reducing the tax burden for your heirs.
I have looked at valuation, economic and other indicators for years and none could predict what stocks would do in the next 1-3-6 months and even years.
This is why I don't follow them.
But, I found what a "simple" way that works and have used it successfully for years.
My goal was to find something that triggers a trade about twice annually. If it's wrong, I know it within a week and I buy back immediately. If I'm right, I'm out for several weeks. In 2022 I was out for 10 months.
The only way to get better is to pay attention to the right things, practice and get better.
You can't learn to swim well reading a book, you actually must swim.
Contrary to the views expressed here and on many other investing sites, I have never simply sat through every market meltdown without taking action. During each major downturn, I spent time reading the work of John Bogle, Warren Buffett, and many other respected investors about why holding the S&P 500 for decades has historically been successful. For most investors, that approach works well. However, I never fully accepted the idea of holding through multiple declines of more than 50% (2000–2002 and 2007–2009) and several additional 20%+ corrections since then. I also studied valuation metrics extensively. Over time, I concluded that while metrics such as P/E and CAPE (Shiller P/E) and dozens of economic indicators can provide context, they often remain disconnected from market performance for years. If investors never look beyond traditional market metrics or consider broader global trends, they risk missing important opportunities—or making costly mistakes.
If they can be wrong for such long periods, why do so many investors rely on them as primary decision-making tools? Here are several ideas that I rarely see discussed.
I ignore more than 95% of financial articles, TV experts, academic opinions, and market commentary. Instead, I remain flexible and evaluate multiple perspectives.
The single most important indicator I follow is price. Price represents where buyers and sellers agree in real time. It isn't an opinion—it is the market's collective judgment. GDP, inflation, P/E, CAPE, employment reports, sentiment surveys, and hundreds of other indicators are simply snapshots. None of them determine market direction by themselves.
I focus on the bigger picture. Major market declines are usually driven by unique global events rather than valuation alone.
Since 2010, I've also argued that while Europe remains a wonderful destination for vacations and retirement for some people, it faces long-term structural challenges. Aging demographics, increasing regulation, slower innovation, and expanding social welfare obligations continue to pressure economic growth. I believe this is also a warning worth considering for the United States.
Consider some examples of when I took actions.
1995–2000: Stocks produced extraordinary returns, despite many companies having little or no profitability. This was unique and led to a loss for the next 10 for the SP500.
2008–2009: The mortgage-backed securities and financial crisis drove the bear market.
2020: COVID-19 shut down the global economy.
2022: Russia's invasion of Ukraine, the highest inflation in more than four decades, and the Federal Reserve's clearly communicated plan to raise interest rates aggressively created one of the most obvious risk-off environments in recent history.
2025: The introduction of broad U.S. tariffs under the Trump administration created another unique macroeconomic challenge.
I was born and raised in another country, where we were taught from an early age to question assumptions, challenge conventional thinking, brainstorm alternatives, and develop practical solutions rather than simply accept prevailing opinions. These are several principles I have followed since 2000. 1. The S&P 500 should remain the core of most portfolios. The U.S. remains the world's economic engine. If the S&P 500 is performing well, I have no problem being invested almost entirely in it.
However, when the S&P 500 enters prolonged periods of underperformance, I look at other broad asset classes such as value stocks, small-cap stocks, and international equities. A good example is 2000–2010, when the S&P 500 produced essentially no return over the decade, while small caps, value stocks, and international markets performed considerably better. 2. Diversification is situational. Diversification sounds appealing, but I don't believe it should be permanent for its own sake. Buffett and Bogle both emphasized concentrating in the S&P 500. I prefer to diversify only when evidence suggests the S&P 500 is unlikely to be the strongest-performing broad asset class. 3. Only a handful of managers consistently outperform. When investing outside the S&P 500, I look for managers or funds with long records of superior risk-adjusted returns. My primary criteria include strong long-term performance, Sharpe ratios above roughly 1.5, low standard deviation, and strong Sortino ratios. The stricter the screening criteria, the fewer funds qualify—and, in my experience, the higher the quality of the remaining candidates. 4. Core-and-explore is an excellent framework. I believe allocating 20–30% of a portfolio to exploring other strategies is valuable. It helped me better understand markets, risk management, and my own investing behavior. That doesn't mean trading every day or every week.
Since 2000, I began by rotating into the strongest risk-adjusted funds based on 3-, 6-, 12-, and 36-month performance, rebalancing every six months. Later, I shortened the interval to four months. Over time, the results were so strong that I gradually increased the allocation from roughly 30% of my portfolio to 55–60% and even more.
This approach is certainly not for everyone. Most investors are likely best served by simply owning a low-cost S&P 500 index fund. However, for investors willing to challenge conventional wisdom, study market behavior, and remain adaptable, I believe there are opportunities to improve both returns and risk management.
I stopped listening to economists decades ago. In my experience, their forecasts have often been less accurate than weather forecasts. I also believe that the stock market does not have a strong short-term correlation with the economy, the news cycle, or the endless stream of market narratives. Those factors may matter over the long run, but they often do a poor job of predicting what stocks will do over the next 1, 4, or 16 weeks, and sometimes even for years. A lot of market commentary is also influenced by politics and specific agendas. I generally tune that out as well. The earnings game on Wall Street is another example. Companies frequently "beat expectations," but those expectations are often adjusted downward in the weeks leading up to earnings announcements as analysts refine their forecasts. This has been part of the Wall Street playbook for decades, which is why I don't put much weight on earnings beats alone.
Valuation metrics have similar limitations. While they can provide useful context, I don't believe they are reliable tools for predicting market performance over the time frames that matter to most investors. While I think buy-and-hold is a great strategy for the majority of investors, there are situations that deserve special attention. Over the years, I developed my own model focused on identifying unique market environments. However, recognizing those opportunities also requires experience and an understanding of how markets actually behave.
The situations I pay the most attention to are those with major global implications, such as:
2008: The mortgage-backed securities and financial crisis.
2020: The COVID pandemic.
2022: Surging inflation, the war in Ukraine, and the Federal Reserve's aggressive rate-hiking campaign.
2025: Significant increases in tariffs and their potential impact on global trade.
These are the types of events that can fundamentally alter market behavior and create opportunities that are worth paying attention to.
Comments
Bonds are where I've made all my money since retirement. Most people think of bonds as their safety net. But over the last 5, 10, and 15 years, BND (the Vanguard total bond index) returned -0.5%, 1.3%, and 1.8% annually. You could have done a lot better. Actually, BND didn't beat inflation. See https://schrts.co/ytfajysu My thinking changed in 2010, when I bought my first unconventional fund, PIMIX, and I never looked back. I realized there are funds and managers who can make good money with much lower volatility, which is just another way of saying a better Sharpe ratio. Add a basic understanding of how markets behave, and my system was born. It's no secret that rising rates demolish bond funds. So when inflation was running hot in early 2022 and Fed officials were openly saying they would raise rates, why were you still holding bond funds? It was the easiest time in years to be out of everything — and that's exactly what I did. The same logic applies elsewhere. Oil runs through the whole economy, from manufacturing to shipping, so when oil prices rise, inflation follows. When the Iran conflict began, wasn't it obvious oil would go up? Oil up, inflation up, rates up, bond funds down. Bogle and Buffett both preached owning just two or three funds. Buffett called diversification "protection against ignorance." I've followed that approach but have used unique bond funds. How it played out:
- 2010: PIMIX's risk/reward was unbelievable. Within two years it was 50% of my portfolio, and stayed there for years. It beat SPY in 2010, 2011, and 2012. https://schrts.co/TcufUNjd
- 2010–2018: Shifted steadily out of stocks and into bonds, until I was almost entirely in bond funds.
- Jan–Nov 2022: Sat in money market, per the reasoning above.
- 2023–24: Bought CLOs for the first time in my life (CLOZ, HOSIX). The risk-adjusted returns made 10%+ annually an easy call. chart
- April 2025: First time I've ever invested heavily in emerging market bonds, based on how they'd performed. I waited several weeks after Trump's sweeping tariff announcement. chart
The point isn't the specific funds. It's that flexibility and looking at the big picture beat holding a bond index and calling it safety.Post: Structuring Bonds
Link to comment from September 19, 2026
There are really only two meaningful measures of investment success: TR(total return) and risk-adjusted return. TR includes everything (distributions too), income doesn't. Yet there is a group of investors who are obsessed with income. Historically, income was a reasonable measure of a successful blue-chip company, particularly before the 1970s. A company that could consistently pay and grow its dividend demonstrated that it was profitable and generating real cash. Then came the tech revolution. Many of these companies chose to reinvest their cash in R&D, acquisitions, and buybacks rather than pay large dividends. Some paid very little or no dividend at all. And what happened? The performance of the technology sector left many of the traditional high-income companies in the dust. Yet some investors are still drinking the income Kool-Aid, focusing on how much a company pays out rather than how much wealth it actually creates. To me, the logical approach is simple: first look for the best total return or risk-adjusted return. Then, and only then, consider income. If a high-income investment also delivers great performance, that's a bonus. But income by itself is not a measure of investment success. Or... Just invest in the S&P 500 and forget about the rest. The S&P 500 is one of the best momentum-driven indexes ever created. Ultimately, it is driven by market capitalization, which is based on stock prices. And price is the market's ultimate measure of success, regardless of what anyone says. The higher a company's stock price goes, the larger its market capitalization becomes—and therefore, the larger its representation in the index. You don't have to predict which companies will win. The index automatically gives more weight to the winners and less weight to the losers. So why even try to outsmart it?
Post: I will still take the dividends
Link to comment from September 13, 2026
Comparison has made my life—and later, my wife’s life—much better. I grew up in a below-average household. Whenever I thought I was poor, all I had to do was ride my bike to a poorer neighborhood. That quickly put things into perspective. Decades later, when our portfolio had grown substantially, we still never paid much attention to keeping up with the Joneses. We always lived below our means and focused on what actually mattered to us rather than comparing ourselves with others. Over the last several years, though, we’ve started spending a lot more. We’ve reached a point where there’s little reason to be conservative. We can’t take it with us, and our kids will still inherit plenty. For us, comparison helped put life in perspective early on—and eventually, it also taught us when it was okay to enjoy what we had built.
Post: The Economy of Expectations
Link to comment from September 7, 2026
My portfolio has been invested in bond OEFs since I retired in 2018. So how did I make 11.7% annually using only bonds?
- I ignored traditional bond investing and focused instead on great bond funds based on market conditions.
- I have never owned individual Treasuries, CDs, or high-rated, traditional bond funds. Think BND, DODIX, etc.
- I also own only 2–3 funds. I don’t diversify for the sake of diversification. As Buffett said, “Diversification is protection against ignorance.”
- Another key is timing and switching several times per year. I'm a slow trader.
- I look for unique market conditions and act (sell everything) when the opportunity is obvious. 2020: COVID crash. 2022: The Fed explicitly promised to raise rates rapidly. Yes, it can be done.
- You don’t need to trade constantly. You need to recognize exceptional opportunities when they appear—and have the conviction to act.
Examples: 2023-4: For the first time in my life I noticed that CLO are doing great with very low SD=volatility. I loaded. See a chart https://schrts.co/wkqVVmup 2023-6: EGRIX. See the chart https://schrts.co/ZKDQzGCbPost: Inflation Hedge
Link to comment from August 29, 2026
Sure, if you can stay invested in 100% stocks, you will likely earn excellent long-term returns. But most people can’t and shouldn’t do it. I know an MD who kept 90% of his portfolio in stocks throughout his entire life. At one point during retirement, he had $10 million and lost $3 million in a market downturn. He didn’t care. He had more than enough money and was comfortable with the risk. That’s the key point: the right level of risk depends on how much money you have and how much you need—not just on expected returns. Most workers don't have a pension, a large inheritance, a stable high-paying job for decades, or millions already saved. They simply can't afford the risk of a major market decline when they approach retirement. When I retired, my portfolio was more than 25 times our annual expenses. Based on our spending and assets, we should have no problem funding our lifestyle through age 100. So why in the world would I risk that security by going 100% stocks? For me, the goal isn't to maximize returns. It's to have more than enough money while taking as little risk as necessary. BTW, I still manage to make 11.7% annually since 2018 using 95% in bond OEFs and hardly losing from any last top.
Post: Risk Management
Link to comment from August 17, 2026
Fortunately, I know several successful investors personally. We’re a group of slow traders who invest in what is currently working and select funds—not individual stocks—with strong risk-adjusted performance. We’ve been doing this for more than 20 years. We don’t use leverage, and we’re slow traders. Sure, buy and hold is a perfectly reasonable strategy. But here’s the question: What funds—no annuities or other insurance products—would you use for a retiree who wants to earn an average of 9-10% annually while never losing more than 10% from any last top? You can’t do it with buy-and-hold. There is no fund or conventional portfolio that can reliably deliver that combination of return and downside protection. If you want both, you need to be willing to adapt.
Post: Risk Management
Link to comment from August 16, 2026
Two observations: Many investors in this forum hold the S&P 500 or a total stock market index for decades. They don't own single stocks and switch, so they don’t realize taxable capital gains along the way. Second, when you pass away, assets held in a taxable account generally receive a step-up in cost basis for your heirs, subject to the applicable tax rules. Both strategies can be very effective for minimizing taxes over your lifetime and potentially reducing the tax burden for your heirs.
Post: Risk and Taxes
Link to comment from August 9, 2026
I have looked at valuation, economic and other indicators for years and none could predict what stocks would do in the next 1-3-6 months and even years. This is why I don't follow them. But, I found what a "simple" way that works and have used it successfully for years. My goal was to find something that triggers a trade about twice annually. If it's wrong, I know it within a week and I buy back immediately. If I'm right, I'm out for several weeks. In 2022 I was out for 10 months. The only way to get better is to pay attention to the right things, practice and get better. You can't learn to swim well reading a book, you actually must swim.
Post: Market Indicators
Link to comment from July 26, 2026
Contrary to the views expressed here and on many other investing sites, I have never simply sat through every market meltdown without taking action. During each major downturn, I spent time reading the work of John Bogle, Warren Buffett, and many other respected investors about why holding the S&P 500 for decades has historically been successful. For most investors, that approach works well. However, I never fully accepted the idea of holding through multiple declines of more than 50% (2000–2002 and 2007–2009) and several additional 20%+ corrections since then. I also studied valuation metrics extensively. Over time, I concluded that while metrics such as P/E and CAPE (Shiller P/E) and dozens of economic indicators can provide context, they often remain disconnected from market performance for years. If investors never look beyond traditional market metrics or consider broader global trends, they risk missing important opportunities—or making costly mistakes. If they can be wrong for such long periods, why do so many investors rely on them as primary decision-making tools? Here are several ideas that I rarely see discussed.
- I ignore more than 95% of financial articles, TV experts, academic opinions, and market commentary. Instead, I remain flexible and evaluate multiple perspectives.
- The single most important indicator I follow is price. Price represents where buyers and sellers agree in real time. It isn't an opinion—it is the market's collective judgment. GDP, inflation, P/E, CAPE, employment reports, sentiment surveys, and hundreds of other indicators are simply snapshots. None of them determine market direction by themselves.
- I focus on the bigger picture. Major market declines are usually driven by unique global events rather than valuation alone.
- Since 2010, I've also argued that while Europe remains a wonderful destination for vacations and retirement for some people, it faces long-term structural challenges. Aging demographics, increasing regulation, slower innovation, and expanding social welfare obligations continue to pressure economic growth. I believe this is also a warning worth considering for the United States.
Consider some examples of when I took actions.- 1995–2000: Stocks produced extraordinary returns, despite many companies having little or no profitability. This was unique and led to a loss for the next 10 for the SP500.
- 2008–2009: The mortgage-backed securities and financial crisis drove the bear market.
- 2020: COVID-19 shut down the global economy.
- 2022: Russia's invasion of Ukraine, the highest inflation in more than four decades, and the Federal Reserve's clearly communicated plan to raise interest rates aggressively created one of the most obvious risk-off environments in recent history.
- 2025: The introduction of broad U.S. tariffs under the Trump administration created another unique macroeconomic challenge.
I was born and raised in another country, where we were taught from an early age to question assumptions, challenge conventional thinking, brainstorm alternatives, and develop practical solutions rather than simply accept prevailing opinions. These are several principles I have followed since 2000. 1. The S&P 500 should remain the core of most portfolios. The U.S. remains the world's economic engine. If the S&P 500 is performing well, I have no problem being invested almost entirely in it. However, when the S&P 500 enters prolonged periods of underperformance, I look at other broad asset classes such as value stocks, small-cap stocks, and international equities. A good example is 2000–2010, when the S&P 500 produced essentially no return over the decade, while small caps, value stocks, and international markets performed considerably better. 2. Diversification is situational. Diversification sounds appealing, but I don't believe it should be permanent for its own sake. Buffett and Bogle both emphasized concentrating in the S&P 500. I prefer to diversify only when evidence suggests the S&P 500 is unlikely to be the strongest-performing broad asset class. 3. Only a handful of managers consistently outperform. When investing outside the S&P 500, I look for managers or funds with long records of superior risk-adjusted returns. My primary criteria include strong long-term performance, Sharpe ratios above roughly 1.5, low standard deviation, and strong Sortino ratios. The stricter the screening criteria, the fewer funds qualify—and, in my experience, the higher the quality of the remaining candidates. 4. Core-and-explore is an excellent framework. I believe allocating 20–30% of a portfolio to exploring other strategies is valuable. It helped me better understand markets, risk management, and my own investing behavior. That doesn't mean trading every day or every week. Since 2000, I began by rotating into the strongest risk-adjusted funds based on 3-, 6-, 12-, and 36-month performance, rebalancing every six months. Later, I shortened the interval to four months. Over time, the results were so strong that I gradually increased the allocation from roughly 30% of my portfolio to 55–60% and even more. This approach is certainly not for everyone. Most investors are likely best served by simply owning a low-cost S&P 500 index fund. However, for investors willing to challenge conventional wisdom, study market behavior, and remain adaptable, I believe there are opportunities to improve both returns and risk management.Post: Open Questions
Link to comment from July 4, 2026
I stopped listening to economists decades ago. In my experience, their forecasts have often been less accurate than weather forecasts. I also believe that the stock market does not have a strong short-term correlation with the economy, the news cycle, or the endless stream of market narratives. Those factors may matter over the long run, but they often do a poor job of predicting what stocks will do over the next 1, 4, or 16 weeks, and sometimes even for years. A lot of market commentary is also influenced by politics and specific agendas. I generally tune that out as well. The earnings game on Wall Street is another example. Companies frequently "beat expectations," but those expectations are often adjusted downward in the weeks leading up to earnings announcements as analysts refine their forecasts. This has been part of the Wall Street playbook for decades, which is why I don't put much weight on earnings beats alone. Valuation metrics have similar limitations. While they can provide useful context, I don't believe they are reliable tools for predicting market performance over the time frames that matter to most investors. While I think buy-and-hold is a great strategy for the majority of investors, there are situations that deserve special attention. Over the years, I developed my own model focused on identifying unique market environments. However, recognizing those opportunities also requires experience and an understanding of how markets actually behave. The situations I pay the most attention to are those with major global implications, such as:
- 2008: The mortgage-backed securities and financial crisis.
- 2020: The COVID pandemic.
- 2022: Surging inflation, the war in Ukraine, and the Federal Reserve's aggressive rate-hiking campaign.
- 2025: Significant increases in tariffs and their potential impact on global trade.
These are the types of events that can fundamentally alter market behavior and create opportunities that are worth paying attention to.Post: The Market’s Unpredictability
Link to comment from June 15, 2026