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Idle Hands Are the Devil's Workshop
Ross Silver • Nov 13, 2019
Many of the fund managers I speak with as well as high net worth types seem to be sitting on their hands. I am not hearing from people I respect phrases like, “I am buying…” or “I added to…” Instead I am hearing funds are leaving and heading towards ETF’s. This is backed up by Morningstar’s most recent fund flow data which stated, “Overall, passive U.S. equity funds saw $22.9 billion in inflows while active U.S. equity funds had $19.1 billion in outflows in September.” The transition from active management to passive ETF’s is alarming to me also. I understand the equity markets have done nothing but go up for the past 10 years but there is a reason for money management professionals, just like there is a reason for doctors and lawyers. I am nervous and think we may be headed lower and with all the money out of professional’s hands, the acute nature of a potential downturn may be vicious.
An investor who I respect that makes a living shorting stocks (thinking stocks will move lower instead of higher) told me he can’t handle another margin call. A margin call is when an investor bets a stock goes one direction, yet goes the other and the investor made the trade on margin meaning they borrowed money. Margin calls are no fun and require a cash infusion into the account or else the brokerage firm will close your position and hand you a loss. This investor has made a career shorting stocks and he has had enough. I told him that likely means the top has arrived and nothing can go up forever, to which he responded “only a fool fights a battle he cannot win.” I get that this market is massively controlled by our government, but the thought that humans can control anything is a fallacy.
So, what is your point here Ross? My point is; idle hands are the devil’s workshop. If anyone thinks markets are just going to continue going up and not have some hedge built in, well, good luck to you. While having any sort of downside hedge has been a loser the past 10 years, it may not be a loser now. Don’t be complacent!
Silver Sports Desk
The flag football season just wrapped up and my 1st & 2nd grade team was a force. While we don’t keep official score in the league, the kids do and they knew that nobody came within three touchdowns of them. My oldest son transformed into a legitimate quarterback and was throwing all over the field and accurately towards the end of the season. When I say accurate, I am talking throwing a football into a mailbox accurate. My middle son had one of the coolest touchdown runs of the season and put a juke move on another kid that was incredible. They both were absolute monsters on defense and opposing teams scored one touchdown in our final 4 games. I am very proud of my boys and I am coaching them both in basketball starting this weekend.
My daughter and youngest son remain in the “Silver Athletic Incubator” but there are some serious signs of talent and fearlessness from both of them. My daughter can run like the wind and is the most agile of all my children. She is going to be a force come soccer season next year and when she is old enough to play flag football; she will be on the field. My youngest son may be a race car driver. I purchased an electric fire truck for him and he drives that thing like it is stolen. ☺
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