I’m undertaking a 1000-day reinvention project, blogging here daily to track my progress. In Sunday Planning, I plan for the week ahead.
Last Sunday I was wondering whether I would apply to a juried art show that had, as its deadline, that day at 11:59 pm. I decided not to apply.
My book assemblage will be in an exhibit opening in September. And maybe I will show in the WCACO member show in January. But other than that, I’m not looking for group show opportunities. I wasn’t enjoying that activity. I got a dopamine hit from submitting an application, and another if one or more of my works was accepted. But I didn’t enjoy dropping the art off, going to show openings, and attending artist talks. I did sell one piece, and won one award, but neither of those external markers of success made me feel like it was worth it to continue.
Plus, entering shows costs a lot of money. First, there’s the application fee, which is never very much. But I often create new works for show themes, and depending on the canvas, I might need to frame a piece if it’s accepted. I buy new supplies based on my plans for shows, versus just using what I have.
Somewhat related, I found last week that I wasn’t enjoying the fiction writing project I’d launched either. I liked thinking about the structure of a book, and the plot. But writing actual scenes didn’t engage me. Thinking of characters bored me.
So I dropped that.
In this midlife transformation journey, I’ve had the chance to try many things and I’ve discarded most of them. The one thing that never left me was the urge to manage my money myself, actively, not passively. If you were to look over my blogging over this time, both on The Reinvention Project and here for the 1000-day project, you would see that while various whims came and went, I never stopped thinking about the economy and what it means for investing and trading. I never stopped experimenting.
And now, with the emergence of powerful AI models that can code given a vague or detailed specification, I can build systems to enact my trading and investing plans. It’s fun, and it’s powerful.
Giving in to that desire and allowing myself to spend all my time on the conundrum of money management as we enter the second quarter-century of the millennium has brought me to a place where I feel a kind of satisfaction, a kind of stability, a kind of having arrived, like a painting arrives at some point, resolved and settled, for now but not forever. Because a painting can always be changed and my life moves forward regardless. Who knows what I might be doing in ten years’ time.
This week’s focus
As with last week, this week I’ll continue working on building the system for my new Flow Allocation approach to managing my longer-term investments, and on Tuesday, I will start the four-week transition to the new allocation. It’s daunting for sure. I have yet to fully finalize the allocations. And no matter what I’m going to be making big changes four the next four weeks, moving what to me are massive amounts of money between investments.
What I came up with follows pretty closely the tactical asset allocation approach I used as its basis. But it is unconventional and contrarian in that it gives far more weight to commodities, real estate, and gold than most people do in their portfolios. It also doesn’t overweight U.S. equities relative to their representation in global market cap terms. One could argue that even making U.S. equities that large in a portfolio doesn’t make sense, because we’ve been riding a long wave of U.S. exceptionalism, leaving U.S. stocks overvalued relative to the world. They probably shouldn’t represent 60% or more of all equity value in the world.
It’s uncomfortable to take a contrarian turn, but I believe now is the right time to do so. While most people look at evidence of the S&P 500’s incredible run and consider it means “all you need to do is VOO and chill” (referring to one S&P 500 index ETF) we are actually at a time when it is more likely to see mean reversion than continued outperformance.
Furthermore, expanding into real commodities and real estate doesn’t necessarily reduce risk as much as you, or I, might think. That’s because the AI trade involves not just large cap U.S. stocks. Real estate, utilities, base metals, and emerging market equities have all risen because of the AI buildout. And they are thus at risk of correction if money comes out of the AI trade.
But my flow allocation model has a solution for that: exiting asset sleeves where the closing price on the day before rebalance day is below the 200-day moving average. Yes, in order for that to be triggered I will already have seen drawdowns. But this potentially avoids the worst of them, and it gives a rule for getting back in. Not being willing to get back in is what kills market timers or, more accurately, panicans. If you panic and sell, great, you may avoid some losses. But how do you know when to get back in? My flow allocation model re-enters once a closing price exceeds the 200-day moving average.
It’s September this week!
I love back-to-school time, when things turn serious again after the frivolity of summer. It’s a good time to be totally revising my investment management approach.
I’ll also be doing some garden tasks such as dividing and replanting irises, collecting zinnia and columbine and snapdragon seeds, and trashing the chrysanthemums I tried to grow that never took off.
And I plan to paint with abandon, not for a show, and not to produce something to sell, but only for the pure joy of artmaking.