Mindful investing is powerful! Here’s why…

Fridays: Mindfulness by Miles FROM THE DESK OF MILES EVERSON: Investing is an important activity that we must learn regardless of the career path we are in. This is one of the vehicles that will help us grow our monetary wealth and build our financial future. Recently, we’ve conducted an Executive Roundtable with Professor Joel Litman, President and CEO of Valens Research, regarding the 2022 Stock Market and Economic Assessment. Personally, I’ve had a lot of key takeaways from his presentation, especially when he discussed the Bear and Bull markets, interest rates and inflation, Credit Default Swaps (CDS), and other patterns that are happening in the stock market. Are you interested to know more about these topics? Read the article below to learn about Professor Litman’s insights and assessment on the stock market and economy. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

Mindful investing is powerful! Here’s why… Executive Roundtable: 2022 Stock Market and Economic Assessment Early this year, we had a roundtable discussion with my friend and colleague Joel Litman, the President and CEO of Valens Research. I personally had a great time at that roundtable. I learned a lot of great investing insights and I leave these lessons will help me make wise financial decisions this year. If you haven’t attended or listened to this discussion yet, allow me to share with you some of the key highlights from the event. According to Professor Litman, the stock market patterns remain throughout the years. He even quoted the words of Jesse Livermore, an American stock trader, who said: “There is nothing new on Wall Street.” This means whatever has happened before in the financial market will likely happen again… and as long as you understand these changes, you don’t have to worry too much. Here’s a fundamental investing principle Professor Litman frequently mentions in his webinars and roundtable discussions. I also strongly agree with this because I’ve seen great results from applying this concept: Buy low. Sell high. This means if the markets are down, that’s when you should buy stock. If the markets fall more, then you should buy more. It’s not that difficult a concept. I think what makes investing difficult is the financial media. When the market is up, the media publishes headlines saying the stock market has yet again reached an all-time high. Here’s the thing: The stock market will reach all-time highs from time to time. It’s been that way for the past 200 years of recently recorded financial history and probably, for thousands of years of civilization before. Another important point discussed during the executive roundtable was that the COVID-19 pandemic won’t change the overall statement that equities outperform everything given enough time. The S&P 500 remains a great place for rank-and-file investors with a long-term perspective. My advice to you if you’re planning to invest in the stock market this year? Keep buying! There’s no need to panic. You can continue to buy stocks even in the midst of a health crisis because of what Livermore said: “There is nothing new on Wall Street.” Aside from that, if you’re studying the credit markets, you’ll understand that no corporate credit crisis means no bear market―a market that falls for a sustained period of time. As long as that remains to be the case, companies in the stock market can figure themselves out and adjust for whatever issues there may be in the pandemic. Here’s one of my favorite segments in the roundtable discussion: According to Professor Litman, the financial market may see a big rebound once the health crisis is over. BUT! As an investor, you must also take note that from 2021 to 2022, there is a MASSIVE, increasing corporate debt headwall. The reason for that is lots of companies refinanced out of their troubles in 2021. As a result, the due dates of their debts fell heavily into 2022. So, while a year or more of recovery may be in the works for some firms this year, there’s still a potential for them to come tumbling down once their debts come due. In the words of Professor Litman, these companies only “kicked their can down the road.” That’s why he said that to be a great equity investor, you have to be a solid credit analyst. Think about some of the greatest stock market investors and value investors. If you ask them about the best book/s on investing, you’d probably hear two titles: “Security Analysis” and “The Intelligent Investor.” Ben Graham, the “Father of Value Investing” wrote both of these books. The first one was written with the help of David Dodd, Graham’s protégé and colleague. Here’s a question: How often do the terms, “debt” and “credit” show up in both books? The answer is over 400 times. This only clearly shows that the guides to great equity investing―whether those guides are in the form of books or investing giants―require an understanding of credit. This knowledge is important because you won’t easily comprehend the phases of the stock market, from value to growth stages to bear markets, without first understanding and communicating the status of credit markets. I hope these principles will help you as much as they’ve helped me in my investing strategies! Just remember: There is nothing new on Wall Street. As long as you have a clear grasp of the credit markets, then that should give you an assurance to keep buying and avoid panicking. Hope you’ve found this week’s insights interesting and helpful. Follow us on LinkedIn. Stay tuned for next Friday’s article!