Broker Check

Petsis Posts #1: Bird, Brady Buffet, Buying Low

| February 05, 2018

Today is an emotional roller coaster at Anthony Petsis & Associates. Many of you know me as more of a talker than a writer, but I'm giving blogging a shot. There was no shortage of content today. 

Firstly, the Philadelphia Eagles have won their first Superbowl. The team unified an already tight fan-base and rallied in the face of adversity. It was poetic; they embodied Rocky and his relentlessness. Rocky has really become the official spirit of Philadelphia sports, and in that spirit the Eagles somehow defeated the proverbial Ivan Drago of the NFL, the New England Patriots.

No fans care more about their team, and the celebrations (especially the ones not covered like those on the streets of the suburbs) proved this.

Today was a happy day, and then it was unexpected. We had an unexpected surprise to the downside across many of the major indices today.

From what I’ve heard as of after market close on Friday, this dislocation wasn’t a flash crash or a fat finger, although I would not be surprised if it comes out a big buy order was canceled (someone important had a big order that was not filled and they called to cancel it, therefore spooking the market) around 3pm when the market was down around 1600 points. It quickly rallied and the Dow Jones finished down 1,175 points.

One thing most of our clients know is that you can’t time a market consistently. People have been fed by watching CNBC and other hot take daily shows that market timing is what it takes to have good returns. I don’t believe this. What I believe makes the big stock gurus like Buffet so successful and wealthy is timing their behaviors. Buffet buys high quality companies when no one wants them and everyone is running for the hills, plain and simple. He ignores the market value and focuses on intrinsic value (what a stock is actually worth independent of external influences.) I will be curious to hear if Buffet bought any companies during this time over the coming months. Usually, we hear weeks after the fact.

If you feel sick about the market today, when the market does rebound (and only then) talk to your financial planner about your asset allocation and risk tolerance. Explain how you’re feeling now (write it down somewhere as detailed as possible so that you don’t forget) and go over it with him or her. Then compare it to your financial goals and see if a change is workable. Until then, consider re-balancing your portfolio into your current allocation to ensure buying high and selling low as well as considering tax loss harvesting strategies in taxable accounts.