Subscriber Only: One Letter Could Change The Way You View Risk
Ever since the autumnal equinox, I’d been expecting this, and like clockwork, this week my 13-year-old sauntered into my office, tossed an envelope on the desk, and asked, “What do you know about this?”
Turns out, quite a bit.
For it was on a similar fall day back in 1980 that I too tossed an envelope, or more likely a packet, on the kitchen counter and asked my parents – with a little less attitude – the same question.
The “this” in question is the annual spring break pilgrimage of 8th graders to Washington, D.C., and the surrounding area, in which they learn firsthand about the buildings, institutions, and documents that most Americans only know of from history books.
He’s on the fence, as I once was.
To help with his decision, we Googled some of the places on the itinerary, one of which is Monticello, the once home and now final resting place of Thomas Jefferson.
“Wait dad,” he said when we came across a picture of Jefferson’s gravesite, marked by a giant obelisk, engraved, per his wishes, with what he considered his three greatest accomplishments.
Here was buried
Author of the Declaration of American Independence
of the Statute of Virginia for religious freedom
& Father of the University of Virginia
But it was the dates underneath that caught my eagle-eyed boy’s attention.
Born April 2, 1743, O.S.
Died July 4, 1826
“What’s ‘O.S.’,” he asked.
The original Julian calendar, adopted under and named after Julius Ceasar in 46 B.C., calculated the year as 365 ¼ days – eleven minutes and fourteen seconds too long – and it wasn’t long before the calendar and the seasons were out of whack.
Most Catholic countries eventually converted to the more accurate Gregorian calendar, initiated and named after Pope Gregory XIII, but England resisted the change.
By the time it was finally adopted in 1752, things were so screwed up that King George decreed eleven days be deleted from the calendar, a change not well received by the peasantry who felt it cheated them out of their pay, so much so that chants of “give us back our eleven days,” were regularly heard throughout the land.
Thus, the O.S. in question stands for “Old Style,” a clarifying appendage suffixed to books, documents, tombstones, and other items of the era, establishing the date attached as adhering to Caesar’s almanac.
Time only exists in a manmade construct, which, by its nature, makes it arbitrary.
Traders measure time in minutes, investors in decades, and the powers that be - motivated by benchmark performance and compensation schedules - chop up the space in between.
A quarter is as good a time as any to pause and reflect on the state of the market, which, if judged based on the one that ended Friday, isn’t in great shape.
It’s a far cry from last year’s market which notched 70 record closes and never went more than 33 trading days without a new high.
It’s the memory of that performance – and the assumption that it would resume at any moment – that drove FOMO traders and investors to pile into rallies throughout this year, no matter how suspect.
So here we are, with three-quarters of the calendar pages in the bin and every index down double-digits. It’s as arbitrary as any time to ask, should we add an “O” to that now famous (or infamous) acronym?
One simple letter that turns a phrase into a question.
Fear of missing out, on?
Applied to the past nine months, the possible answers are endless.
Overnight gap downs. Volatility spikes. Failed breakouts and relentless selling?
The media’s hyper-focus on, and the market’s reaction to, CPI and PPI reports, the job numbers, or Fed announcements?
The 70%, 80%, and in some cases, 90% drawdowns we’ve seen in former highflyers?
Think of all the things that could have been missed out on if the answers to that now question considered risk at least as much as potential.
If each new opportunity was viewed as just the next in a never-ending series, instead of the last train out of the station – jump on or regret it forever.
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