Yes, it's me.
Again.
And yes, I'm here again for the reason you think: the US markets fell heavily on Friday night, our time (down about 6%), and the ASX futures suggest that we'll drop by a bit over 4% here, today.
Sick of me yet? I hope not.
I posted some thoughts about investing in times of volatility on Twitter this morning, and one follower generously replied:
"Thank you. Much fretting re all this. Some reassurance is much appreciated"
I don't blame them.
It's hard to see a meaningful proportion of your portfolio disappear, after much saving and investing and waiting.
Especially if you're near or in retirement.
You wonder if it'll come back. If you'll have enough.
Or if it'll get worse.
But not just for retirees.
I get it.
For me, investing is a passion, a hobby and, yes, a job.
I've spent a lot of time reading and thinking about markets, and company analysis, and investor behaviour.
And a lot of time at the coalface, as an individual investor, and as an investment advisor.
But most people have day jobs. Other interests. Other skills.
I couldn't fix my car to save myself. I don't have to: I have a great mechanic.
But we all have Superannuation. We're all encouraged to save and invest.
But we don't all have the interest, skill or temperament.
Just like me, when it comes to cars.
(I'd like to. I just don't.)
Which is why, regularly in this space, I try to share my thoughts on saving, investing, business and economics.
I try – hopefully with some success – to share what I've learned, aiming to make this stuff accessible to people who aren't investing nerds.
To the extent I miss the mark sometimes, I'm sorry. But I hope it hits the spot often enough to be helpful.
And I'm back, this morning, trying to be helpful again.
I wrote quite a bit last week on how I'm approaching the recent market falls. And how I think all investors should do it.
We should remember that volatility isn't unusual.
We should remember that markets rise and fall.
We should remember, though, that they rise far more than they fall.
We should remember that fear is normal.
We should remember that our job is to recognise and make peace with that fear, and to invest anyway.
We should remember that the ASX has historically compounded at around 9% per annum for over a century.
We should remember that it did so despite wars, recessions, a Depression, terrorist attacks, pandemics, market panics and much, much more that we've since forgotten about.
We should remember that every crisis feels existential at the time, but looks like an opportunity in hindsight.
We should remember that our investment horizon – even in retirement – should be measured in decades.
We should remember to not invest any money in shares (or anything else) that we need in the next three years, so we can ride out the storms, financially and emotionally.
We should remember that optimism wins. Not because we think it should, but because history tells us so.
We should remember that, right now, people are working on new solutions to new and old needs and wants.
We should remember that human ingenuity, which creates progress, isn't a function of the share market, but of human nature.
I wish I could promise that today was the end of all of this volatility. But I can't.
I wish I could call the US President and tell him that not only is he temporarily damaging the value of wonderful businesses, but risking jobs and businesses on an ill-conceived ideological whim.
(It is stupid, on all of those levels, and more. If we're lucky, it's a short-term negotiating tactic. If not, they'll be with us for a while. It is, in either case, economic madness that will result in self-inflicted economic wounds.)
But I wish I could have prevented COVID, terrorism, inflation, irrational exuberance, and a whole lot more, too.
What I know is that the ASX and US share markets hit all-time highs earlier this year, after all of those things happened!
Please read that again.
None of those things was enough to stop progress. To stop improvement. To stop long term success.
That's why I invest.
That's why I remain invested.
That's why I'll be buying more shares, soon.
Because I think the future is just as bright as it's ever been.
Not in the absence of black clouds, but despite those clouds.
I get that for many people, it's scary. And let me be very, very clear: it might get worse. Or it might not.
But remember that the sharemarket has created enormous compound wealth for those who invested, and remained invested, over decades.
(My favourite example? The good people at Vanguard tell us that a hypothetical $10,000 invested in the middle of 1994 was worth $130,000 three decades later, despite all of the bad stuff that happened to the world, and the economy, over that time!)
So… I hope that helps.
I hope you can stay the course. I hope you'll keep investing, whatever comes next.
(And as a bonus: if you own shares in companies that pay dividends, that can be a nice way to receive some cold, hard, cash even when share prices are volatile.)
One additional point:
There'll be a phalanx of panic merchants, rubberneckers (and sub-editors!) climbing all over today's market falls.
That'll magnify the way you feel about them (if they come as expected).
So please, try to keep it all in perspective.
We've been here before. No, not exactly here. But essentially the same place.
Fear. Uncertainty. Doubt.
And we've gone on to better things, long-term, despite that.
Will it be different this time?
Maybe. But I doubt it.
Because we've got 100-plus years of history to show us.
And because, as Sir John Templeton famously declared: "The four most dangerous words in investing are: 'This time it's different'".
Now, in case you missed it, or want to watch it again, I spent an hour or so hosting a YouTube Live last Friday at lunchtime.
I went through what's happened, and the fallout to date. And though it was recorded before Friday night's falls in the US, if I did it again today, I wouldn't change any of it.
So… if it helps, I'd encourage you to check it out, by clicking on the image below.
Fool on!
