The ideal investing time frame: part two
A time frame that works
A few weeks ago I wrote about trying to find my investment time frame. Am I trader? An investor? A trivestor?
Market conditions have made it exceedingly clear that I’m not a trader. I made a profitable bond trade last month, and another profitable trade shorting the S&P 500 from its recent high. However, these are counterbalanced with other positions that haven’t worked out as planned.
Learning to sysmetically trade so that I could be consistently profitable would probably take a few years. Or longer! Maybe I besmirch the trading community by suggesting I could learn their craft so quickly. I don’t know. I may educate myself in the fundamentals of trading one day, but not today.
A time frame
The time frame I’ve come to accept is six to eighteen months. Although I may well hold a position for a decade, I don’t necessarily want to invest in an asset that may take years to perform.
A mindset
Imagine what the world will look like a year from now. In that world, what is going to be in high demand? What can I buy inexpensively today, that will be highly sought a year hence?
I love this mindset because creating the future is an intellectually stimulating activity. For example; Europe. The European continent is heading into the winter with questionable energy supplies. It could be brutal, or maybe it won’t be as bad as FinTwit thinks. I’m not sure. However, let’s forget about the winter for a minute and ask: what’s going to happen in the spring?
After the winter is over the citizens of Europe are going to demand solutions. That will mean more pipelines (from Algeria?), LNG facilities, solar and wind, and nuclear where it’s politically acceptable. Even if the average European citizen is broke, I expect governments and by extension the ECB to subsidize spending.
What’s going to do well in that type of environment? Commodities, I would imagine. What is cheap right now? Commodities. A match made in heaven!
That’s a thesis, anyways. Maybe it’s right or wrong, we’ll find out. The mindset is what interests me. When I buy an asset I’m not concerned with what it’s price will be tomorrow, I’m concerned with where’s it’s price is likely to be a year from now.
