Bye-bye 2014, hello 2015

Many things happened both economically and geo-politically in 2014. QE was wound down in the US, while Russia annexed Crimea, civil war raged in Syria, oil prices collapsed, the dollar strengthened, and ebola sent a shot across the bows. The US economy showed steady improvement throughout the year even as Abenomics stalled in Japan, Europe stumbled, and China slowed. Financial markets react to each and every event, and like a boxer, they absorb and go on, seemingly oblivious to that which was important before but now barely registers.

The markets are maddening because they never seem to compute the information in the same way as I. Markets have an intrinsic upward bias that is incessant, dogmatic and resilient. Until the vapor of strength disappears in a smoldering implosion of panic. We are five years into a strong up-cycle. The probabilities derived from history should lead one to caution. The odds are it is long in the tooth. But that was true at the end of last year and the year before that as well. I can't help but think we are in a nether world between the stimulant of recovery and the onset of correction. Markets have been kind and no one wants that to go away. That wishfulness that leads to self-delusion is what is most dangerous. Caveat emptor.

Many things will happen in 2015. We don't know what they will be, but we do know many events will transpire and the market will react. We don't know what will trigger the next major market decline. Faith in the central banks has kept a lid on any falter. Much of what happens is noise. In the broad sweep of history events that we thought momentous are but minor details. It may be that the biggest development of the last 15-20 years was the rise and fall of central banks. That chapter is still being written.

It is hard to frame the present in the context of history, only time will tell, but if we have confidence in man's ability to innovate, growth and expansion are likely to follow even as the markets, which may have got a little ahead of themselves, fail to reflect those secular drivers in perfect cause-effect.

My New Year's resolutions are as follows:

• Focus more on principles and the big picture.
• Make a conscious and concerted effort to get outside my comfort zone. 
• Work on developing new skills, especially in communication and relationships.
• Have a plan each and every day. 
• Be a nicer and better person.
• Don't think more highly of yourself than you ought. 
• Remind yourself that the world owes you nothing and you have to earn everything. 
• Be more positive (in life, in business, in outlook).

Building Wealth vs Protecting Wealth

Great quote from the Alpha Architect.

Wealth is often built by concentrated holdings, but wealth is protected by diversification.

Data, Tools, Technology, Accessibility...Not Always Good

More data, more access, more tools...that is the modern moniker.

But it has been devastating for investors.

The more data we have, the greater access to information and tools, only makes for more reactive decision making. The death sentence of good investment management. We think it is good for us, but it preys on our human nature, bleeding us of patience, discipline and conviction.

Investors must be disciplined enough to ignore the news, ignore their statements and to put their investment portfolios into Rumpelstiltskin deep sleep.

They would be much better off.