By: Matt Garrott
James Bond movies and the TV series Seinfeld are both classics and cultural touchstones, but the conflicts in these stories could have been resolved more quickly than they played out. Goldfinger could have just shot Bond instead of strapping him to a table under a slow-moving laser. Seinfeld episodes like The Parking Garage (the gang splits up to look for their car and hijinks ensue as they struggle to meet back up) would unravel with one small change: the cell phone.
Just because conflict could have been avoided doesn’t mean these aren’t great stories. They are great stories because of the conflict. We don’t want the murder to be solved 10 minutes into a cop drama. We want to see the struggle because that’s what we experience in the world each day.
This is why so many have been wrong-footed by the low volatility in the stock market recently. It shouldn’t be this easy. “Just” sitting in an S&P 500 index fund has felt unsatisfying. The S&P 500 hasn’t had a correction of 10% or more for over a year. We haven’t even had a drawdown of 5% in the last year. No secret underground lairs. No convoluted plot involving Art VanDeLay.
It can be tempting to poke a portfolio and tell it to do something so we can create a narrative for the movement. If we can resist that urge, though, we can be more objective and drive better outcomes. Leave the search for a plotline to the financial entertainers. After all, Seinfeld’s key was that it was a “show about nothing”. Your portfolio doesn’t need drama to be great, either.
