As you all know these are interesting times…again. It’s funny to me how often people fret about economic twists and turns as if prior to right now it’s all been hunky dory? Not sure if you recall, but our country in its short little history has been through two World Wars, a Civil War, and about 20 recessions and a depression. Let’s throw in a dozen or so “conflicts” (Vietnam, Korea, Spanish American War, The War of 1812, Desert Storm) to name a few. We’ve been through the economic devastation that followed 9/11 and most recently the Great Recession of 2007/08 and a little thing called Covid. The biggest issue facing investors every day is not Geopolitics nor is it the twists and turns of a Capitalistic system. It is in fact their own inability to understand that markets and life are bumpy. The expectation that your life and/or portfolio is going to proceed and conclude without the not-so-occasional bump or bruise is not only wrong, but it’s also delusional and unproductive. Like a child, your investments need to be allowed to fall and skin a knee or get hit by a pitch every once in a while. If we wrapped our kids in bubble wrap (don’t do this, it’s funny, but upsets your wife) and never let them experience pain or setback they would be ill-prepared for the hand-to-hand combat that is life.
Mr. Wonderful aka Kevin O’Leary of Shark Tank is fond of saying his “dollars” are his little warriors, he sends them out to bring back more. Sometimes he sends them out and they don’t come back the same, or they don’t come back at all in certain battles. With that understood most do come back and given enough time and patience, they come back bigger and stronger than before.
Several points to make here.
- The issue may be different this time (political players or economic calamity) the outcome will not be for those who allow their warriors to fight on.
- Yes, maybe the recession “they” have been predicting for two years now will come. (“Economists have predicted ten of the last 5 recessions”), so what? Are you gonna bury your money under the house or buy gold from the B-list actor on TV? Stop it!
- News Flash (I know you love those), the world is an imperfect place where bad stuff happens… DAILY! Get over it and stop as my grandma would say “wallering in it”. (spelling?)
- There has “literally” been no time in our market’s history that maintaining your disciplines and allowing them to get bumped and bruised did not see them come back bigger and stronger. Accept that the markets are imperfect and it’s that very imperfection that allows the patient and disciplined to make superior returns to their impatient and skittish counterparts.
Peace,
Scott (not A.I.)