Confession of my nervous holiday…How the fiscal cliff ruined my New Year’s!

The newsletter was written and we had posted multiple times here and here,  just to name a few, very confidently that the fiscal cliff was a yawner, much like Y2K…..you see where I am going with this, not a mouse in the house, it’s all clear!  A funny thing happened on the way to 2013, I must confess that as the deadline ended and there was no agreement, I began to worry and even began pacing a few times when spending time with my family and in-laws over the new years weekend.

You may be asking, “Why am I writing this?”

A couple of reasons, first to let you know we are all human and that while we talk a strong game, there are not just ice cubes running through our veins and we do worry as well.  Another reason is to tell you our/my approach to what turned out to be nothing, but in hind site, you may find interesting.

We generally have in mind a fair market value for the S&P 500 at all times. This is based on the information we know at the time and the expectations from analysts among other things. The thought process is/was that if the capital markets opened at a significant discount to that fair value, we would begin allocating/buying towards the lower and distressed prices.  Sounds easy…not really, as we would be buying when “The Sky is Falling” so to speak.  The keys are to have an idea what is a good deal, and also most importantly to “believe in the system” both of which we do. That being said, my personal fury toward our legislators during the final time still remains, and I am glad we did not have an “Event.”

While we can wipe our brow as no action was warranted or needed, there may be a time when we are in a similar situation. I would expect the thinking to be the same on our part or at least similar given the circumstances.

Hope you enjoyed my honest confession…thanks family for ignoring my pacing!

Have a Great Day!

JK