The Pain Indicator

Ouch. For the first time in years I reach for a painkiller again. Good thing my 85-year-old neighbor keeps a small reserve and immediately hands me a few tablets. Three weeks later I take another one. Sadly, it doesn’t help.

I feel a bit like George Soros. The legendary global macro manager of the Quantum Fund became world-famous in 1992 when he speculated against the Bank of England and the pound sterling and made huge gains. One of his quirks was that he often experienced intense back pain just before major turning points in financial markets.

I am not entertaining any hopes of worldwide fame. Still, I find it quite plausible that our bodies warn us intuitively before our brains fully process a situation rationally. After all, intuition emerges from the flood of information we constantly absorb.

When your back knows more than the markets

My first bout of disc trouble had far more earthly causes. Lifting too heavy during a morning workout or doing a movement with poor form. Then, three weeks later, a long train ride without moving and a neck muscle that had locked up completely.

The sharp price swings after Nvidia’s quarterly results still made me briefly wonder whether pain and market turbulence might be connected. Almost as if the topic of artificial intelligence not only dominated the stock market. It suddenly seemed to be influencing everything.

Moments like these make me especially grateful for our clear strategy and discipline at Gutmann. They don’t spare us from thinking carefully about each position, tracking developments, and interpreting them. But they do protect us from rushed portfolio maneuvers and panicked decisions. We remain consistently well balanced and adjust our positions regularly.

Large fluctuations in share prices actually help. They allow us to gently trim or add to individual holdings in a countercyclical way. Or, as a well-known investor from Omaha once put it, volatility is the friend of the long-term investor.

For now, my spine has calmed down again. Targeted, consistent exercises were the key. The effect took longer than a quickly swallowed tablet. But it turned out to be far more sustainable.

I call that a pretty instructive example of smart investing.