The Bull Market Will End: Is It Time To Rebalance?

American Pharoah

In case you missed it, you can watch an “At a Glance” summary of this week’s blog posting here.

I want to talk to you about a horse BECAUSE it matters.

American Pharoah is the horse to be specific.

In 2015 he became the first horse to ever win the Grand Slam of thoroughbred racing.  That means he won both the Triple Crown and the Breeders Cup. In. The. Same. Year.

Triple Crown    Breeders Cup

Do you get it?

No horse has ever done this before or after.

And yet, when he was a one year old in Upstate New York, he didn’t stand out at all. No one knew he would become one of the best race horses EVER. If not the best.

Nobody knew American Pharaoh was a special horse except for one guy. Jeff Seder. Jeff is a guy with three degrees from Harvard.

And at 26 Jeff looked in the mirror wearing a three piece suit while working at Citibank and said, this world isn’t for me. So he quit and moved to rural Pennsylvania and decided he was going to work with race horses.

Specifically he was going to study what makes a great racehorse great.

And he knew how he was going to do it. He was going to use big data and look for what actually mattered and delete the rest.

In other words he was looking for that essential ingredient that determined everything.

And for years his work was a disaster.

He first measured the size of horses nostrils. Thinking big nostrils allowed for better breathing and better performance. He created the world’s largest, still to this day, horse nostril database. And he cross referenced that with how the horse eventually performed. And he found out that nostril size didn’t matter.

He measured the size of their muscles with tape rulers. And cross referenced that with how the horse eventually performed. And he found out that didn’t matter.

Jeff even measured the size of horses’ defecations. That didn’t work.

And then he decided he was going to build the world’s first horse ultrasound machine to measure the size of a horse’s internal organs.

He could use this to measure various attributes of the horse including parts of the heart.

And then he found it.

He found that one thing that determined everything else.

He discovered that the size of the left ventricle had a massive connection to racehorse performance.  

The left ventricle was a massive predictor of future performance.

Take American Pharoah as a 1-Year Old

Height 56 percentile

Weight 61 percentile

Pedigree 70 percentile

Left Ventricle 99.61 percentile

Among horses with large left ventricles, most had diseases with very small organs and an enlarged, almost deformed left ventricle. But all of American Pharoah’s organs were big, but his left ventricle was enormous.

So let’s put Jeff’s left ventricle discovery into perspective:

  • American Pharoah won the triple crown (first in 39 years)
  • His winning time of the Triple Crown was the second fastest ever
  • He also won the breeders cup in same year (this had never happened before… ever)
  • And he won the Breeders cup by 6 ½ lengths, the largest margin ever.

So clearly American Pharoah’s left ventricle was that key ingredient.

Fearless Wealth is about showing people the stock market’s “left ventricle.”

What I learned in 20 plus years of researching what really works.

It’s not diversification.

It’s not rebalancing.

It’s not company selection.

It’s not fundamentals.

It’s not passive investing.

It’s not active investing.

It’s not more data.

It’s not more “pick of the month” newsletter stories.

It’s not trading.

And it’s not the 60/40 balanced approach.

The “left ventricle” of investing comes down to one thing.

Are there other smaller ingredients that help and assist? Of course there are. But none come close to this one thing.

The “left ventricle” of investing is knowing when you should be in and out of the stock market. Not trading in or out. But being in for longer periods of time. And knowing when to be out for those shorter dangerous falls.

Interested?

If so, we do all the hard work for you. And are willing to work harder than anyone else. Why? Because we are obsessed with knowing and understanding “the left ventricle of investing.”

In Your Corner,

RCPeck-Dig Signature.JPG     
RC Peck, CFP

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