Power of Reset
“Reset” has been a big theme of 2019 so far—resetting involves setting back to an initial state—sometimes the baseline of zero, other times simply an adjustment after getting far away from normal.
In basketball, we’ve been working on resetting—when the initial fast break doesn’t yield anything promising, we have to take the ball back out and reset our offense. On defense, we play man to man on the inbound pass but then reset to a zone afterward. From a game perspective, we’ve had to reset expectations as we’ve been overmatched. Lots of resets.
This weekend’s snow event was a big reset. January is always crazy busy as it is year end, quarter end, the start of tax time, Melanie and Ben’s birthdays, basketball season, etc. And then a big snow comes, and life slows to a standstill. We reset to a much slower pace and a different mindset of staying home as opposed to running all over town. We enjoyed the snow…and tackled little paint projects that we never seemed to have time to do:
The stock market is also hitting a reset point in 2019. After the worst December performance since 1931, the stock market has rebounded nicely so far this year.
Here was what the market looked like as of December 31, 2018:
V/B/G refers to Value, Blend, Growth stocks…L/M/S refers to Large, Medium, Small size companies…so, as of 12/31/2018, Small Value stocks were the worst performers of the year. Health Care and Utilities companies were the only positive sectors in the market, with energy being the worst sector.
And then the market reset on January 1, 2019…
Here is what the market looks like as of January 14, 2019:
Small companies are leading the charge…energy stocks have rebounded nicely. Generally, a much different market than a few weeks ago.
Likewise, we are seeing investor appetites for risk reset. It is easy to want to own stocks when they are going up…it is much more difficult to want to own stocks when they are wildly up and down from day to day…minute to minute. 2018 serves as a good reminder that risk assets are called that for a good reason, and being prepared for bouts of volatility and a rough year in the market is critical. As a good friend of ours says, you can’t buckle your seat belt in the middle of a car accident. So, resetting expectations of risk/reward and safety/cost are healthy and welcome.