In this discussion, Shana addresses questions from partners, Menda and Dale, regarding the issuance of sell alerts amidst a market drop, which seems contradictory to the strategy of buying when the market is low. Shana clarifies that while it is generally a good idea to buy during market drops, not every investment is worthwhile simply because its price has decreased. She emphasizes the importance of not trying to catch a falling knife and notes that it’s nearly impossible to buy at the market’s lowest point intentionally. Instead, investors should aim to buy near the lows and recognize that this realization often comes only with hindsight.
Shana further explains that their strategy is not about timing the market with big moves but about making informed decisions to buy and hold or buy and manage investments. She discusses the importance of monitoring investments and reevaluating them if they don’t perform as expected over time. For example, some investments may be sold if they are no longer seen as biblically responsible.
Lastly, Shana touches on the need to stay diversified, even when selling off certain assets. She advises maintaining a balanced portfolio with cash and CDs, especially based on one’s risk tolerance and proximity to retirement. This approach aims to be prudent while navigating economic uncertainties without deviating from the long-term investment strategy.
We have several partners, Shanna, who are asking for some wisdom on being wise with what they have. And of course, as you mentioned at the top of the show, we want to make some sense of these recent sell alerts. So we’ve got a couple of partner questions that came in. One of them was from Menda. Menda’s question reads as such: If it’s the time to buy when the market drops, why are there so many sales right now? This confuses me.
And then a similar question, Shanna, came in from Dale. He’s saying, I’m not certain I understand how the August 8th sell alert comports with the financial issues long-term hold philosophy. The third paragraph states, quote, these long-term holdings are still valuable, worth retaining. But then we issued some sell alerts for some of the long-term holdings that were acquired from the buy list. He’s wondering, did I miss something? Did you never state why these particular holdings should be sold at this time?
Shanna, what advice can you give to both Menda and Dale?
Yeah, right. So we didn’t articulate each and every reason for each and every company on the list. So I would agree with the statement that we have a long-term philosophy and that it’s a good thing to buy when the market drops. However, when the market drops, opportunities are created, but not everything is a good buy just because the price is down. So Dan used to always repeat the old Wall Street adage: Don’t try to catch a falling knife. So, you know, that’s part and parcel there.
So I do see what Dale’s talking about is, and maybe I can clear up the confusion there about these valuable long-term holdings are still valuable and worth retaining. What I’m speaking to are probably the 70 or 80 percent of the stocks that he still has, that he bought off of the buy list. So, you know, there are times when sell alerts are issued. We have a buy and hold or buy and manage strategy, not a buy and ignore strategy.
Yeah. Yeah, that’s good stuff. You had mentioned one of Dan’s quotes there, the old Wall Street adage: Don’t try to catch a falling knife. There’s another quote, as you say, Shanna, interesting: It’s almost impossible to buy when the market’s at its lowest. So the goal is to buy when it’s near the lows. How do we reckon this? Because none of us knows when the market’s going to be at its lowest. What do we make of this?
Yeah, that’s exactly right. You won’t know when it’s happening, when the market has reached its lowest point. In fact, you probably won’t even have that realization or understanding until you have six or 12 months of hindsight. So impossible, you know, it’s impossible to buy at the low of the market, might be a tad bit of hyperbole. But, you know, there’s there’s a small possibility that it may happen that you may just happen to buy at the lowest point. But, you know, I can feel very confident that it won’t be because it was intentional. It won’t be because you knew that that was the bottom. And like I said, you might not even actually know that you’ve done it until you have a good bit of hindsight.
Yep. Good stuff. So then the follow up question, Shanna, is how do we follow the strategy wisely without trying to time the market? Understanding what Dale and Menda had said, how do we do this well?
Yeah, so let’s define timing the market a little bit. To me, timing the market is making big moves. But we’ll say timing the market a little bit because we think a more attractive entry price may be coming. We like I said, we are a buy and hold strategy. We are not a buy and ignore strategy. It is important also to monitor your investments. So, you know, one of. And I see Billy’s in the call. They’re about this particular one are fixed to bring up. So this might this might be his question. But I hope we’ll stay. But, you know, MA40 was on the sell list as well. And you know, when you look at the long term performance of that particular company, well, it didn’t actually pay off to be exactly what we were expecting it to be so.
You know, you don’t buy a company for eight to 10 years and then sell it after eight to ten months just because it hasn’t done what you thought it was going to do over the next eight to ten years. But if you get some years into it and it doesn’t look like the company is performing like you thought it would, then you know that is a good reason to get rid of it and get something else that you think is going to do better over the long term.
Yeah. So that’s kind of the thought pattern there.
Yeah. Good stuff, Shanna. That’s that’s really helpful. And then just a final follow up, you know, with our current strategy position, this is a question we’ve gotten from some folks as well. How do we stay well diversified in the midst of what we saw last week?
Yeah. So even with the sell alerts and the many sell alerts that have gone out recently and I hate to say this, but there’s going to be another one coming on MA38, but it’s because it’s no longer biblically responsible. So wait for the alert on that. We’re going to try to get it out to you pretty soon. But even with the sells that we’ve done recently, there are many companies that, you know, if you bought, like Dale said, when they were on the buy list, there’s probably a lot that you still own and we haven’t suggested that you sell those. So my experience based on the hundreds of portfolios that I manage for my clients, following exactly that financial issues model, I’m assuming that partners are probably about 15 to 30 in cash and CDs on the lower end if you’re younger or have a more aggressive tolerance on the higher end if you’re closer to retirement or have a lower risk tolerance. But, you know, like I said, I’m eating my own cooking, I’m following the strategy. And so I assume that the partner experience is going to be pretty similar to what to what I’m seeing with the portfolios that I manage. So going 15 to 30% in cash is not extreme. So we’re not deviating from the long-term strategy. We are not trying to time the market. We’re just trying to be a little bit prudent with the things that we see unfolding in the economy. You know, the markets have had a little bit of a reprieve, but I don’t think that that means that we’re out of the woods.
So. Yep. It’s helpful stuff there, Shanna. Thank you. That’s good.
