Changes in Latitudes, Changes in Attitude

The Iconic Jimmy Buffett album was released in Jan 1977. It features Jimmy’s first hit Margaritaville. Late in life he shared the naming rights with a hotel operator that has opened many properties in the states and across the Caribbean.

Nibblin' on sponge cake

Watchin' the sun bake

All of those tourists covered with oil

Strummin' my six string on my front porch swing

Smell those shrimp they're beginnin' to boil

Wastin' away again in Margaritaville

Searchin' for my long lost shaker of salt

Some people claim that there's a woman to blame

But I know it's nobody's fault

Don't know the reason

Stayed here all season

Nothing to show but this brand new tattoo

But it's a real beauty

A Mexican cutie

How it got here I haven't a clue

Wastin' away again in Margaritaville

Searchin' for my lost shaker of salt

Some people claim that there's a woman to blame

Now I think hell it could be my fault

When I see the brochures for beautiful Caribbean hotels, I sometimes get the FOMO bug (that Fear Of Missing Out). The roller-coaster financial markets may cause others to have a bit of FOMO.

Are we really missing anything at this point? The S&P 500 (the so-called benchmark) has had this experience (according to Yahoo Finance):

• Closing Oct 31, 2021 - 4610
• Closing Oct, 31 2022 - 3901
• Closing Nov, 30 2023 - 4547

Much of 2021 & 2022 we spent at a level below where we are today. What is missing from this picture is the fact that less than 2% of the companies in the S&P 500 are responsible for all gains in 2023. So, for those concerned with FOMO, you haven’t missed anything yet.

In the song, Jimmy is heard complaining about the tourists on the island. “Watchin’ the sun bake all of those tourists covered with oil”. In a derogatory way, some of the Wall Street types refer to the Jon Q Public as “tourists” because they often buy high based on enthusiasm. Then, they sell low as they get spooked out of the markets.

It is our job to put the markets into perspective. We should invest with a long-term perspective, seeking attractive risk reward opportunities. Investments should be rented, not owned…everything can have a value that is too expensive to own and on the buy side, many things begin to look attractive at some price point.

Words from investing legend, Larry McCarthy:

“It takes years to get this, but we MUST use those fears, feelings, and emotions to our advantage. When they start to hit you in the gut, carefully measure the feelings and most importantly the fear. The more fear and emotion you feel, most of the time, that’s where you are sitting on the doorstep of an opportunity, an outstanding buying point. And for selling, at the very point you want to give yourself a pat on the back or find yourself talking up your winners with your friends, selling some holdings. Creeping hubris is the best signal to lighten some holdings.”

For a couple of years, we have written about the S&P 500 and how the indexes skewed weightings toward a few companies. The index is weighted based on the size of the company in the index.