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Being Wrong Vs. Being Early


The only difference between being wrong and early is whether you're there to collect on your bet, even if the bet is not making a bet.



You've been cautious on the market since the summer. Yes, you could very well be right and early. However, when something you think would happen does not, it begs the question why? Is it because the parties holding the keys have a different motivation and agenda? Are they able and willing to continue or change course? What are other factors that have so far been ignored, which could have contributed to a different conclusion? We, as reactors, have our own decisions to make.

That is where I am at this point-trying to make a decision based on confusing information. What I think should have happened has not. Should I wait for the situation to become clearer? Or should I be "early" and take the action, and accept possibility of risk and being "wrong?"

It is a philosophical question as well as a practical one. You are very much aware of the cost of being "early" or "wrong". That is why I am interested in your opinion.

Minyan A


Very well said; the context of time is correct, as is the multi-linear equation of the markets, human emotion and intellectual agility. We used to say the destination we arrive at pales in comparison to the path that we take to get there. For me, I attempt to execute against that dynamic with my trading portfolio.

In my long-term bucket -- which has been in cash since well before the crisis began when equity markets were 30+% higher -- I'm comfortable with that posture as it's a longer-term nest egg I cannot afford to lose. The only difference between being wrong and early is whether you're there to collect on your bet, even if the bet is not making a bet.

Opportunity cost is the other side of discipline; that doesn't sugarcoat the 'miss,' but if I've learned anything over the course of my career, it's that opportunity cost is a lot easier to make up for than losses.

There is a scenario where the big picture concerns don't manifest for a few years. That's what corporate credit markets are telling us but I believe the crisis has evolved into the socioeconomic spectrum. I wince at the notion of being branded a dire wolf-take me at my word, I've bet big on the upside over the course of my career. Some of the smartest people I know are raging bulls and that fact isn't lost on me. The unknown variable is amorphous, dependent on social mood, risk appetites and struggling sovereign nations around the world.

Through the lens of the context of time, to bring this full circle, there are scenarios in the probability spectrum where investors migrate further out on the risk curve and asset classes move higher. See all sides, as we like to say, and I continue to watch the dollar (if that catches a sustained bid, I belief all bets are off) and S&P 1120ish as a technical context with which to define risk.

Not sure if this makes sense but I most certainly hope it helps.

Have an awesome holiday stretch.



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