A message from our Chief Investment Officer: "We're in the hole with you"

G'day Fools,

As you no doubt know, the US stock market took a steep dive (it fell around 7.6%) overnight.

It wasn't unexpected. One of the things about a globalised world (and the futures market) is that we get a heads-up, before we go to bed, of how US traders and investors are thinking.

So, when I turned off my bedside lamp last night, I had a pretty good sense of what I'd be waking up to.

That doesn't make it any easier, of course, but it does remove the element of surprise, for what that's worth on a day like today.

So, how am I feeling this morning?

I have two very distinct feelings.

The first, perhaps surprisingly, is ambivalence. I've been around the block a few times by now, and while periods like the last few weeks are uncomfortable, I'm not unduly phased.

Of course, I hate it when my portfolio goes down. When I think of the dollar value of the losses. Like you, I'd much rather my portfolio just go up and to the right in a nice, steady straight line.

But the ambivalence comes from knowing, deep down, that this is just what happens on the stock market from time to time.

Knowing that it always passes.

Knowing that I can't do anything about it, other than ride it out and keep investing.

No, not because I don't care. And certainly not because I don't like money; I do — very much!

I just know that this is what happens in markets. And I've learned — through education and experience — to endure it, because it's worth it.

My second feeling is one of concern.

Not for markets. Not for my portfolio. But for our members.

I know some of you are doing it tough right now.

For some, retirement is around the corner, and you're reassessing your plans.

Some of you are new to investing, and thinking 'What the heck is going on?'

Some of you have been around a while, but not long enough to have invested through the GFC, so falls like these are new.

And some of you invested through the GFC, and you're not sure if you have the stomach to do it again.

Those are the people I'm concerned about.

The ones who are losing faith. In me. In us. In investing altogether.

The ones who are just 'this close' to selling everything, going to cash, and giving up.

I'm concerned because I'm pretty sure that'd be a bad idea.

Hopefully you've been reading my emails over the last couple of weeks. So you know that, despite setbacks like the current slump, shares have always gone higher.

Which would make now a terrible time to lose faith.

Me? I haven't sold a single share. I've been buying more in recent weeks.

Those shares are now in the red, because the market has fallen since I bought.

I couldn't be less worried.

I bought quality companies, with long-term earning power, at good prices.

Which — when you boil it all down — is what investing is.

Those shares might fall further. They almost certainly will, today.

Of course, with 20/20 hindsight, I wish I'd waited.

I also wish I could sing and had more hair. 

But, as they say, if wishes were horses, beggars would ride.

I didn't think I was 'picking the bottom' when I bought. I said as much at the time.

Over the long term, if my assessment of earnings power was correct, it won't matter.

And, because I try to invest regularly, I'll probably be buying more shares this week or next.

And I still have no idea whether it'll be the bottom. I'll just be buying for the same reasons.

I say that not to make it all about me, but to reassure you.

Now, I can make no promises. No-one knows what happens from here.

But this isn't my first rodeo. 

I've been here before. In 2008/9. In 1999/2000. 

(Spoiler: my portfolio is larger than at both of those times because share prices tend to rise, over time, because reinvested dividends are like yeast, and because I've added money regularly.)

My hope, then, is to give you reassurance to combat the well of doubt inside you, and the screaming headlines around you.

One of my US colleagues, Ron Gross, and I both have the same favourite television show: The West Wing.

I've been rewatching it, recently.

A couple of things stand out: first, the dot.com crash of 2000 makes it into the show's plotlines — a nice reminder from the past.

But Ron shared one of my favourite scenes with our global investing team, overnight.

One of the best characters ever written (and acted) in a TV show is the President's Chief of Staff, Leo McGarry. He's talking to his Deputy Chief of Staff, Josh Lyman, who's going through a tough time:

This guy's walking down a street when he falls in a hole. The walls are so steep, he can't get out.

Long as I got a job, you got a job, you understand?

Right now, you might feel like you're down a hole.

For the record, the hole isn't as deep as it might seem. I'm pretty certain that much will become clear once we have the benefit of hindsight.

But in the meantime, know that I, our GM, Bruce Jackson, our Director of Research, Anirban Mahanti, and our investing team are down in the hole with you.

And we're confident we know the way out.

Fool on!