I love to look back at the history of the market. While there is no guarantee that the future will mirror the past, it sure seems that we see repeatable patterns again and again. Some of the things that I have noticed:
- We get to stable, low volatility period, and people become fearless and want to go aggressively into the market.
- Volatility starts to increase, and people pride themselves on being able to “stay the course.”
- We get to a correction point (market down 10%), and people begin to question their decisions.
- We get to a bear market of down 20%, and Chicken Little makes his/her appearance on every news show and tries his/her best to scare the heck out of folks. Chicken Little succeeds with a fair number of folks.
- The market recovers over a few-year period (sometimes even faster).
To me the above is absolutely comical. No, losing 20% of my stock holdings is NOT comical. BUT, listening to people proclaim that “this time it is different” and speculate that we will be stuck in ANY of these states for a protracted period of time is— to me—utterly mind-boggling.
I tell people ALL THE TIME, that I believe in two “truths”:
- Twenty years from now their will be more people on this earth.
- Twenty years from now the world economy will be bigger.
Am I right? Well the only way to know for sure is to check back in twenty years. However, my beliefs have proven to be pretty solid for the past couple of centuries. And there have been some UGLY happenings in the world over that time!
We may be entering into another period of perceived “long-term” stability. I would LOVE that to be the case. However, when volatility in the market goes down, my EXPECTATION is that we are going to see it increase in the not too distant future—cycles seem to repeat!
The attached article goes into more detail on this topic. Hopefully, after you have a chance to review the article, you will better understand this topic AND be able to incorporate this new knowledge into your investment strategy.
- Do you have a well-defined Investment Policy Strategy that is used to drive your investments?
- If not, would you like to partner with someone who is used to helping people get through these struggles and (then, with confidence) implement portfolio strategies in a systematic manner?
If so, feel free to send us an email or give us a call.We’d love to have the opportunity to help you find a bit more peace of mind when it comes to investing.
Enjoy the read and remember, it’s NOT about the money. It’s about how the money supports your goals!
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