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Wine Talk


I had an interesting conversation with a fellow retired banker.  He is quite the intellectual, as well as a devout Christian.  The conversation drifted into the difference between long-term and short-term thinking.

He explained that his greatest long-term fear is going to Hell, and his short-term tactic to avoid this is to follow the teaching of Jesus every single day.  Then, he asked my greatest long-term fear and what tactics I use to prevent that long-term fear from happening.

I explained my greatest long-term fear is watching my clients suffer great losses when the inevitable debt bomb explodes in the United States, and my short-term tactics are to practice Modern Portfolio Theory for my growth clients but always with my finger on the SELL button.

We agreed that the timing of our long-term fears cannot be predicted with any accuracy.  When will he die and when will the debt bomb explode?  Nobody knows.  One can only make reasonable assumptions.

While many people suffer failing health before their death, there are some clues about the inevitable debt bomb for Americans.  I watch CDS spreads fairly faithfully, as well as cross-country inflows.  However, some information is hard to find.  The crucial information from the last recession was from the asset-backed commercial paper market.  Better access to that information would have provided more time to digest and react.  Looking for better information is a full-time job.

On the other hand, some people die quickly with no warning signs, and THAT is why one finger is always on the SELL button.

My friend laughed and pointed out that hitting the SELL button unnecessarily is like committing suicide unnecessarily.  At that point, we were out of wine and prayed we would never discuss this again.

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