Breaking Away

It's been such a long time
I think I should be goin', yeah
And time doesn't wait for me, it keeps on rollin'
--Boston

What word best describes my current level of attention to the markets? Detached. I'm less plugged into the flickering ticks than I've been for quite a while.

While many claim that the only way to play this market environment is to trade 'em, I've elongated my time horizon towards positions that have more 'destination' rather than 'path' thesis. While I still like to follow the granular events and trader thought processes, my investment posture leaves me less inclined to link my actions to the daily flow.

A longer term market frame has likely spared me considerable angst during the market melt over the past year. Ms Market has chewed up traders and spit them out in droves during the past 18 months.

The flip side is that I may be less sensitive to shifts that could materially impact my investment theses. For example, I've taken little action in my positions in select pharma such as Merck (MRK) and Pfizer (PFE) despite recent events (health care reform that appears more eminent w/ the new administration, recent mergers, etc) that may very well impair long term returns on capital with these firms.

That's the risk with an investment posture. You're less likely to react quickly to game changing news, which challenges effective risk management. Compared to traders, investors are likely to suffer significant drawdowns as they piece together emerging info and compare it to their investment story. However, the potential payoff if (big if) 'patient capital' gets it right can be significant.

Maintaining an investment posture in this environment certainly seems less crowded. The book is still out on its value-generating properties...

positions in MRK, PFE