Dig A Fox Hole, Deep

Start with the premise that there’s no place to hide. You can lose serious money on a high dividend blob like General Motors. A faulty entry point in Tesla can gap you down 10 to 20 points.

A good offense is always the best defense. Goldman Sachs was a bouncy property, while Microsoft was losing friends. How many of us have learned that the name of the game is not traditional money management conformance? Let someone else project price-earnings ratios, or a company's operating profit margin.

Learn to do what comes naturally to a Warren Buffett. Find the best operator in a business sector, then go all in. I’ve watched Warren operate for 60 years. At times, we brushed shoulders in Geico, newspaper publishing and bank stocks. I sold out American Express prematurely, but no regrets on my New York Times 20% holding. 

These days, I carry major overweights in energy MLP’s yielding 7% like Enterprise Product Partners. I’ve learned to build up my courage based on facts, not whether Microsoft should sell at 30 times or 20 times operating cash flow. Sold down Microsoft because there’s no new story to offset growth in its artificial intelligence sector.

Decelerating growth rates for tech houses become sure death sentences. Where are their replaceables? I’ve added to the financial sector,  more Goldman Sachs, a play on the continuous rise in business activity, brokerage deals, and energy plays.

Although financial markets boil and bubble, the art market shows some weakness. Prices for iconic art have sloughed off some 10 to 15%. Pieces of contemporary works draw lower bids than in recent auctions at Sotheby’s and Christie's.Never be a forced seller in the art markets. During World War II forced sellers of masterpieces by Rembrandt and others got knocked down to $10,000.  Refugees badly needed cash to move out of dangerous war zones. 

Lemme go back to the Big Board. Are you brave enough to go against the grain during a major sell, market panic, even a spontaneous crashe like Black Monday?

Black Monday is a great example because there was no specific, major event that precipitated an overnight crash of 19%.Traders, when they entered their offices early Monday morning encountered a deluge of sell orders. They solved this issue by shutting down their phones. There were no brave operators around who wanted the buy side.

Unleveraged,  with plenty of open-to-buy,  I began by nibbling on big capitalization stocks. Everyone believed I was insane. Even stodgy stocks like General Motors can show a range of 50% up or down during a market cycle.

The Cuban missile face-off was a pure geopolitical face- down between Jack Kennedy and Khrushchev. Days elapsed while the Russian freighter entered our waters,  medium range missiles on its deck.  Our ticker tape ran five hours late by mid-afternoon. 

So, I closed my eyes and overbought growth stocks like Polaroid, IBM and Xerox. This was 1968, they were as yet noble houses. Next day, I was disciplined by the head of margin for exceeding my buying power. Playing with barely 6 figure numbers I braved Street volatility.  

Believe me,  it took lots of moxie to pressure my self. Living in an apartment rental for 100 bucks, monthly. Today, my biggest decision is whether to throw out my insurance carrier whose rates are outrageous. I expect  the placid lake I live on in Palm Beach floods beyond recall years out. 

Central point is never let the market control your actions. You’re in charge and order the market to do your bidding, like a dog. Black Mondays are singular trading venues.  Everyone’s wrong, but you’re on the money.