Balancing Bull vs Bear
Sometimes I think too much. I drive my wife crazy by constantly changing my mind from day to day, but I can’t help it. I’ve got the same thoughts on the market, but rarely act on them. Here are some of the thoughts running through my mind right now.
Why You Should Sell Everything
I’ll avoid 95% of the messes (rising interest rates, huge debt, Russia invading Taiwan, etc…) and just focus on the elephant in the room. China has made it clear that they believe Taiwan should be under the control of China.
You don’t need to fully understand China or Taiwan (I don’t) to understand how huge of an issue this would be. World powers can’t idly sit by as China invades Taiwan, but what are they supposed to do? The playbook by Europe/US was laid out against Russia, with little military support and a lot of financial supports for Ukraine and financial restrictions for Russia. Essentially it’s a financial war. Maybe, China invading Taiwan would be different but whether the response taken would be financial or military actions, it’s clear it would be a terrible situation for all involved.
It’s very possible that I’m overrating the possibility of China invading Ukraine, but I think actions as devastating as that should be overrated. Even a 5% probability should keep you up at night. China is a world power and has played a key role in the increasing globalization we’ve seen. The rapid unwinding of globalization would be a tremendous shock on so many different levels (supply chain, financial, social, etc…).
Why You Should Keep Buying
The world is always a shit show! We always have a bias towards the present, constantly discounting the past and the future. The past shows amazing amount of progress we’ve made as a society. Why would the future be any different?
We have so many reasons to be bearish and just a few to be bullish. That’s normal though, it’s much harder to think past the short term. We are incredibly resilient, but we take time. The crisis hit faster than the solutions, but the solutions are always on the way, they just aren’t obvious at the time.
I know I’m thinking too much. I’ll mess around the edges because the bear cases are real, but 98% of my funds will be deployed as if the world will be a better place in 10 years than it is today, even if it doesn’t feel like it will be in the moment.
