Musings Report #4 1-26-13 On Making Major Transitions
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On Making Major Transitions
Many of us are either seeking to make major transitions or are being forced to do so due to layoffs, downsizing, etc.
Correspondent Joe G. recently asked me about my own experience in transitioning from one career to another, and our dialog made me wonder what, if anything, can be generalized about the process of making major transitions.
Here are some initial observations:
1. Transition is stressful. The key stresses in life are all transitions: death of a loved one; divorce; moving; loss of job. We know this but tend to expect too much of ourselves in terms of making rapid, fluid transitions. The process is messy, painful, two steps forward, one step back, and meet-the-unexpected. We need to be forgiving of the process and ourselves.
2. Some transitions are extensions of our previous job/career/location and thus intrinsically easier, though no less risky. When I became a licensed general contractor/builder at 27, this was simply a much riskier and potentially more rewarding extension of my previous 8 years of construction experience working for other contractors (all starting as a way of working my way through college at a job that paid more than minimum wage). It required an entire new suite of managerial and estimating skills and more capital, but the procedures were not entirely new to me.
Perhaps moving to a new home in the same city or region is a similar extension: the neighborhood is new, but not radically so.
3. Other transitions require establishing entirely new pathways, new skills and new networks. For me, becoming a free-lance writer and doing public-relations for a small non-profit had little in common with running a building business. Some basic skills were transferable--supervisory skills, working in groups, the basics of marketing, for example--but the implementation was completely new.
In terms of moving, the analogy is moving to a new country, state or novel environment: from city to rural, from town to urban region, etc.
4. The road ahead is never as clear as the moment of realization that we want out of the present place/job/relationship.
5. The path to a successful transition is often circuitous. In many ways, the traits of resilience--low cost of innovation, flexibility, willingness to adapt/try things, acceptance of failure, constant learning--also help us navigate major transitions.
Market Musings
For any number of reasons--A Fed Driven Rally, seasonality, a general sense that corporate profits are still strong and the global economy is on the mend after a rough 2012--stocks are in a very strong bull market. There are plentiful signs that the rally is getting extended, and also evidence that there is more room to run higher. Consider these charts:
The COT on the Australian dollar, which is strongly correlated to the S&P 500 (SPX): peaks tend to mark SPX tops, lows tend to align with SPX bottoms:
Via Oakshire Finance, a chart of institutional money on the sidelines--not much left to throw into the market:
Meanwhile, the long-missing retail investor appears to be coming back into the market. This may not be a sustained trend, but it is interesting, as the "smart money" looks for retail buying to mark tops:
Tom McClellan has drawn attention to the apparent correlation of the euro COT (advanced one year in time) and the SPX. This chart suggests a dip is overdue with another rally into June.
If there was any indicator that worked all the time, we'd all be millionaires, so even as evidence that the market is stretched piles up, that doesn't mean the rally can't extend to previous highs:
1576 (10/11/07 top)
1565 (10/9/07 top)
1553 (10/31/07 top)
1524 (12/11/07 top)
Given the proximity of the previous high, I would be surprised if the SPX didn't kiss 1576 and then gravitate to the round number of 1600. The question is when this might happen: in February, or May-June....
I'm starting a new feature in Market Musings: What I am doing, and What I would do if I were managing $1 billion.
Sometimes they are the same, sometimes not, reflecting the reality that I trade a very small sum of money and am occasionally willing to take an outsized risk exposure because the money involved is modest.
What I am doing: looking for large-cap stocks with earnings that have lagged the market.
What I would do if I were managing $1 billion: start hedging my longs with cheap out-of-the-money puts and look for solid PE large-cap stocks that have lagged the market due to earnings disappointments, etc.
From Left Field
Infrastructure in decline: Southeastern Pennsylvania Transportation Authority (via Joel M.) "Over the next 20 years, SEPTA will need approximately $8.5 billion to pay for additional state of good repair projects. That cost combined with the backlog means the total state of good repair cost from 2011 through 2031 is an estimated $13.2 billion."
Letter to my old master from a former slave, August 1865 (via Katharine K.) A very forgiving soul....
Ten Minutes to Help You Understand China's Environmental Emergency: " environmental constraints are the most urgent of several limits affecting the famed "Chinese growth model," and because of them it is far from obvious that China will ever "overtake" the United States or anyone else."
How much military is enough? (via Maoxian) Long, not ground-breaking, but a good history recap of American views on its military.
What does Google need from Android? (via Maoxian) Interesting question--perhaps "nothing"? Android is essentially an open-source Nokia-Blackberry-Microsoft killer and Apple rival....
Thanks for reading--
charles
