Sunday, March 04, 2007
If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:
If you can dream - and not make dreams your master,
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:
If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on!"
If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!
- Rudyard Kipling
While Kipling's risk management leaves something to be desired (Macro Man doesn't recommend risking everything on one throw of anything), there are some pearls of wisdom contained within the lines above.
Although last week's volatility was a clear change in market environment, it should not have been altogether unexpected. By the same token, it need not usher in months if not years of lower stock prices and economic depression.
Frankly, Macro Man is surprised at the degree of attention that last week's volatility has produced in the mainstream media. After all, this is the fourth year in a row of an ugly correction in the March-May period.
The important thing is to stick to the plan and try, insofar as possible, to "keep your head when all about you are losing theirs." To Macro Man, that means looking for weaker risky asset prices over the next month (with the occasional rally interspersed), with a preparedness to start buying when things look truly grim in, say, early April (though Macro Man reserves the right to change his mind on timing.)