The present anxieties, emanating largely from the unpleasantness in Iran, have induced a predictably hysterical reaction in the equity markets. The ten-year Treasury, briefly flirting with levels last seen in the distant past of April 2025, suggests a certain…discouragement amongst those who lend money to governments. Investors, naturally, appear to be in a state approaching panic. One observes this with a detached amusement, recalling the cyclical nature of these things.
The long-term investor, of course, views such turbulence as a mild inconvenience, a temporary lapse in the relentless march towards…something. The belief that geopolitical excitements are, by their very nature, transient, allows one to purchase perfectly sound assets at a discount. The American economy, despite the caterwauling, continues to expand, and corporate earnings, while not exactly exuberant, remain respectable. These, one trusts, are factors that will ultimately prevail.
I maintain a modest reserve of cash, not as a matter of prudence, but as a means of exploiting the follies of others. These brief spasms of irrationality present opportunities to acquire companies at prices that, while not precisely generous, are at least…reasonable. I have no desire to identify individual ‘winners’ – a pursuit best left to those with more optimism, or less sense. My preference is to purchase the entire market, accepting the inevitability of both profit and loss. For this purpose, I employ the Vanguard Total Stock Market ETF (VTI 1.37%).
The Perils of Cleverness
The current obsession with sector rotation is, as always, profoundly silly. Last year’s enthusiasm for technology ETFs, fuelled by the artificial intelligence mania, demonstrated the herd’s unwavering commitment to chasing yesterday’s news. This year, the pendulum has swung – predictably – towards ‘value’, ‘dividends’, and ‘cyclicals’. The largest inflows are now directed towards energy, industrials, and materials – sectors which, for the moment, happen to be performing adequately.
This relentless pursuit of recent performance is, in my experience, one of the most reliable routes to disappointment. Many investors, having gorged themselves on technology and AI stocks, now find themselves overweight in a sector that has, shall we say, lost some of its lustre. They are, naturally, missing out on the modest gains being enjoyed elsewhere. It’s a cautionary tale, really, about the dangers of believing one’s own publicity.
To purchase the entire market during a downturn is simply to acknowledge the inherent unpredictability of things. While the Vanguard S&P 500 ETF (VOO 1.34%) is perfectly adequate, I prefer the broader coverage of the Total Stock Market ETF, which includes mid- and small-capitalization companies. These smaller entities, often overlooked, have been underperforming for some time, but are now exhibiting a certain…resilience.
One need not be clever when attempting to profit from a downturn. While the largest gains may elude one, the risk of significant loss is correspondingly diminished. To purchase the entire market, rather than a carefully selected portion thereof, is not a strategy for instant riches, but a means of surviving the inevitable chaos with a modicum of dignity. And, in the current climate, that is perhaps achievement enough.
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2026-03-09 01:32