Anyone that has visited Italy may be familiar with an Italian concept called "La Dolce Far Niente." Loosely translated as "The Sweetness of Nothing," it embodies the carefree approach to life that you may find strolling through Florence or Naples. When we visited Venice two years ago, I will never forget enjoying our daily routine of late morning gelato and espresso when we saw two cooks make their way from the kitchen out into the front. As they sauntered up to the lounge area, the server poured them both a mix of Prosecco and Campari, which they enjoyed for the next couple minutes before returning to the kitchen to begin lunch service. Alcohol aside, I felt it was a great example of the relaxing way that many Italians undertook their normal daily rituals.
Dr. Colleen Long wrote a fantastic piece on Psychology Today about this approach to life, and what could be gained by striving to do nothing as opposed to do something with every waking minute.
Early this morning I had yet another opportunity for La Dolce Far Niente when our one-year-old son Henry once again decided he was ready to get up well before humans are designed to do so. As I was rocking him back and forth, I was thankful for the opportunity to just be for a while, listening to the quiet of a slumbering house. Unable to do anything "productive" and allowing myself to truly relax.
As investors, we often feel that "investing" implies taking action. You need to buy something, or sell something, or check your cellphone for the market update. Doing nothing, and waiting for actionable signals that really compel you to take action, is often in your own best interest. Trading for the sake of trading alone has rarely, if ever, led to long-term success in the markets.
Except for one big down day last week, the market has gone that painful third direction (not up, not down, just sideways) which often means La Dolce Far Niente is the prudent course of action.
Source: stockcharts.com
However, the last 48 hours have brought the S&P down to a rising 50-day moving average, which lines up with a short-term Fibonacci retracement from the last swing low. Does this mean buy? Not necessarily. But it does suggest that we are nearing a point that compels action. How the S&P trades over the next couple days can help us understand whether this is a buyable dip or the first of multiple legs down.
In the meantime, I'd encourage you to think about how you can incorporate La Dolce Far Niente not just in your investing, but in your life in general!
Disclaimer: This blog is for educational purposes only, and should not be construed as financial advice. Please see the Disclaimer page for full details.