Archive for April 2025
Longtime readers of my newsletter know that I am an advocate of comparing your portfolio to your wardrobe. When the market offers you a discount, you shouldn’t see your wardrobe/portfolio as losing value. Instead, you should see this as an opportunity to add to your collection of clothing items/investments.
I also like to explain that in your retirement, your well-being will depend not on past prices, but on the number of durable assets you own. Some of you might ask:
What is a durable asset?
In my mind, a durable asset is an asset that grows with humanity, independent of technology and politics.
A prime example of this is the global stock index fund. It includes nearly all traded stocks in both the US and international markets. It represents the total business value of humanity. As long as humanity exists and demands higher living standards, the total business value of humanity will increase.
Is an outstanding stock like AAPL a durable asset?
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How to Deal With Big Market Drops
Posted on: April 7, 2025
Since April 2nd, the S&P 500 has dropped by 10.5%; and since its recent peak on February 19, it has fallen by 18.4%. How should we react to such significant market drops?
To answer this question, I want you to imagine that you bought all your clothes from Neiman Marcus and they are hanging (or sitting) in your wardrobe. Now imagine that Neiman Marcus announces an across-the-board 30% discount on all of their clothing items. Would you say “Damn, my clothes are now worthless” and sell them all at a flea market? You probably wouldn’t and might even make a trip to Neiman Marcus to buy a piece or two to add to your wardrobe.
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The Investment Scientist 