From the desk of Willie Delwiche.
Wall Street is a trend following machine.
We all know the universal disclaimer: past performance being no guarantee of future results.
But what has worked recently always gets a ton of attention from Wall Street. And for the past decade, buying and holding US large-cap stocks has worked.
If you’ve benefited from that trend, you deserve congratulations. Deviating from the principles of diversification and putting all your investment eggs in that one basket has increased your return and reduced volatility. To some extent, the worse your behavior (relative to theory), the greater your reward.
There is plenty of historical data that says that was not supposed to happen. But it did. Price is price, and we don’t argue with it. Lived experience takes place in the space between theory and anecdote. That is where most actual investment decisions take place as well.
But we can only celebrate the last victory for so long before getting ready for the next game.