My dad and financial bubbles - a retrospective.
/1

My dad is not a wealthy investor. He is, however, the best risk manager I've ever known. Although he's never had a +100% year, he's never had an annual drawdown that I can remember. And he's got an impeccable track record of calling tops. /2

My dad didn't spend his career in Finance. He was a professional engineer, with the utmost attention to detail and a unique ability to limit risk while not compromising budget or function.
/3

The biggest fight I had with my dad as an adult was over the dotcom bubble, Christmas 1999. I had been investing in stocks and mutual funds for a couple years and became accustomed to seeing my stocks up every day in USA Today. /4

My dad and my uncle started talking about a cousin of theirs who had quit a high paying job to day trade and was making $5k a week doing so. My dad said "If that guy is making money trading stocks, the market is about to crash." /5

I should've listened, but I didn't. Instead, I argued how Alan Greenspan was never going to let the market go down and how valuations didn't matter anymore. Sound familiar? /6

My dad pulled all of his money out of stocks in January. I blew up my account long $AOL $WCOM $EXDS $XLNX and a now-defunct company called Ashton Technologies. /7

Fast forward to summer 2007. My dad retired with a 401k and a lump sum pension payout. I asked him what he was doing to do with the money, and he told me he had invested it all in CDs at 6% interest because he didn't think he'd ever see rates that high again in his lifetime. /8

I asked him why he thought that, and he talked about how he didn't understand how all these Adjustable Rate Mortgages could ever work if rates rose and he felt that rates would have to come way down to keep people in their homes. I argued it was a new paradigm. /9

A few months later, a friend who had moved to the West Coast lost his house when his ARM rate doubled overnight. This time it clicked for me, and I sold all of my stocks and followed my dad into 2 year CDs at over 5% interest. /10

Every one of us has a unique skill set. My dad is not a growth stock investor. He's never going to hit the 25X home run on a $TSLA or $JDSU. But does not take drawdowns. /11

My dad was bullish throughout the entire Trump Presidency even - when I wasn't- until last fall. That's when he cashed out, started buying silver coins, and told me he'd like to get in on a commercial real estate project. /12

I'm not saying the top is in, but I am saying it's close. /end