So what now? Investing in a world upside‑down
We’re living in a time that feels a little like a toddler’s tantrum: the markets are bouncing, earnings reports are dropping, and nobody can say when the economy will stop rattle‑rattle‑rumble. If you’ve ever wondered how to keep your portfolio from turning into a Rube‑Goldberg machine, sit tight.
“Fear incites human action far more urgently than does the impressive weight of historical evidence.” – Jeremy Siegel
This line from a Yale grad is a reality check that markets aren’t going to wait for a tidy storybook ending.
Why March was the hottest month for volatility
- Stock price swings hit highs of +/-10% in the S&P 500.
- Traders bought and sold on the last searing breath of market fear.
- It felt like an endless loop of highs and lows—an emotional roller coaster for the masses.
The pandemic is a true “black swan” event
In plain English: we’re all strangers to the future, and the vox populi (public opinion) is offering prayer‑like guidance to the markets.
What long‑term investors should do now
- Revisit your safety‑net: tighten your emergency funding in case of another thunderstorm.
- Stick to your long‑term playbook: if history says diversification beats a lone pick, it’s still a good idea.
- Manage expectations: treat volatile markets as a cave of secrets—some treasures are hidden, others are traps.
- Keep the humor front and center: a few jokes about “the walk of the market” can ease the mental toll.
Bottom line: The market’s clouds are thick, but as the journey goes on, staying steady and patient is the best channel to long‑term success. So fill your bucket, keep the gloves on, and remember: the smoother you paint, the better the final masterpiece. Cheers to a brighter portfolio future, one step at a time!
Focus on things that you can predict
We’re Not Guessing the Future, We’re Picking Winners
Why You Can’t Forecast Every Stock Move
In the world of finance, the future is a wild card. Traders will argue for hours about the next market dip, but forecasting every detail that could sway a stock price is a fool’s errand.
Focus on What You Can Influence
Investing is less about predicting every market shake and more about spotting the companies that have the best odds of lasting a long, profitable life.
Enter Terry Smith
- Founder of Fundsmith and the UK’s biggest equity fund.
- He believes in keeping the analysis lean.
- His recent letter to investors sums it up.
He wrote:
“What will emerge from this apocalyptic state? How many of us will become sick or worse? When are we released again? Will we travel as much as before? Will those extreme government measures for the economy push inflation? I’ve no clue. Just like the companies we admire, I spend little time contemplating what I can’t predict or control and instead focus on what I can affect.”
So, the takeaway: don’t waste time chasing the next big wave—focus on find the sturdy ships that can sail through any storm.
Don’t forget that the stock market is the best place to invest for the long term
Why the Stock Market Still Wins for Your Wallet
We’re in a whirlwind of headlines that keep pitching bonds, crypto, and whatever the next big thing is. But the evidence says it’s the good old U.S. stock market that really pays off over the long haul.
Stats that Pack a Punch
- From 1928 up to 2019, U.S. equities returned an average 9.7 % a year.
- That’s almost double the 4.9 % annual haul from 10‑year treasury bonds.
- In other words, if you’d rather let your money earn at a steady 5 % a year, you’re missing out on the big bang.
Why It Feels Like a Relic… Yet It’s Still Pure Gold
Think of the stock market as a rollercoaster: one day it climbs high, the next it dips, but the ride’s overall direction is upward. Even during the roughest weeks, quarters, or bear markets, it keeps chasing that 9‑10 % per year average.
David Gardner’s Three‑Step Playbook
“From day one… we said three things.”
- Stock market = the best long‑term playground.
- It tends to yield 9‑10 % a year, no matter how volatile the show is.
- Have a game plan that lets you sleep soundly at night.
So if you’re feeling tempted to chase the next shiny investment, pause. Your future might just be jealous if you skip out on the dependable, time‑tested returns of the market.
Hold Your Bets
Stick to a diversified portfolio, keep your eye on the big picture, and remember: the stock market has a proven track record of beating the alternatives.
Don’t try to time the bottom
Are We Still Chasing the Bottom?
Every investor’s got that nagging question stuck in their mind: “Did we hit the bottom?” The truth is, there’s no crystal‑ball that can tell us exactly when the market is at its deepest. And yet, that uncertainty shouldn’t keep us from rolling up our sleeves and buying.
Why “Perfect” Is the Enemy of a Good Deal
Howard Marks, the billionaire investor with a knack for plain‑spoken wisdom, once scribbled in a memo:
“The old saying goes: ‘The perfect is the enemy of the good.’ Likewise, waiting for the bottom can keep investors from making good purchases. The investor’s goal should be to make a large number of good buys, not just a few perfect ones.”
In other words, obsessing over the imagined perfect entry point often ends with missed opportunities wrapped in regret.
What Happens When You Wait Too Long?
- Opportunity skims by: Many investors plan to jump in only when they see a “bottom” sign on the chart—only to find that their dream dip never materializes.
- Stocks climb higher: When prices keep ticking upward, the urge to “hold off” becomes stronger, yet the market’s great gains start slipping away.
- Years of growth missed: Those who stay on standby often find themselves staring at the market from afar, knowing they could have benefited sooner.
Takeaway: Buy Good, Not Perfect
Don’t get fixated on that elusive bottom. In most cases, it’s a mirage that can keep you on the sidelines. Instead, aim for steady, solid purchases. A good strategy is to buy a handful of reliable, well‑structured investments—a practice that, over time, beats waiting for that one good piece of luck.
But remember to pick the right stocks
Picking the Right Companies Is More Crucial Than You Think
Looking to put money into individual companies instead of a broad index fund? Get this – not every company is a winner.
Why the S&P 500 Isn’t the Whole Story
The steady climb of the S&P 500 over the long term looks great on paper, but most of that growth comes from just a handful of giants doing the heavy lifting.
Eye‑Popping Stats
- JP Morgan’s 2014 study revealed that 40 % of all stocks in the Russell 3000 since 1980 actually ended up with negative lifetime returns.
- In plain English: 2 out of 5 ticks could feel the pinch over time.
So, if you pick a random stock hoping it’ll turn a profit just because you’re holding it long enough, you’re probably aiming at a coin toss.
Choosing Companies is Kind of Like Picking a Good Poker Hand
It’s not just about the asset class – the quality of the company matters just as much.
- Quality earnings
- Solid balance sheets
- Effective management
Especially these days, when companies with shaky finances are fighting a losing battle.
Warren Buffett’s Wisdom (With a Dash of Humor)
As Buffett famously pointed out, “Only when the tide goes out do you discover who’s been swimming naked.” In other words, the big fish aren’t always the ones looking nice – they’re the ones keeping their sheets tight and their eyes on the prize.
Takeaway
Always scrutinize a company before you invest; it’s as critical as picking the right fund to start with.
Stay calm and keep investing…
Stocks in a Wild Ride ‑ What’s on the Horizon?
Let’s just say the markets are feeling a bit like a roller‑coaster that’s been on a caffeine binge: intense ups and dramatic downs. And that’s not just a headline‑liner’s dream. The next few quarters are shaping up to be a bumpy patch for earnings across the board.
Starbucks’ Crystal Ball
Take Starbucks, for instance. They’ve just dropped a crystal‑clear forecast: a 46 % drop in Q1 2020 earnings. It’s a grand opening act, and the rest of the market might mimic that drama — or even outdo it.
What the Long‑Term Road Looks Like
Lucky for the savvy investor, the Gartner Field Guide (not really—just a metaphor) tells us that the glitter of profitability isn’t forever in decline. Companies that run smoothly, with a deliberate strategy and a bit of healthy discipline, are expected to claw back and even flourish once the shape‑shifting economy settles down.
So rather than sitting on a one‑quarter cliff, I’m keeping my eyes on the future skyline and scouting out the firms that will weather the storm and keep the lights on.
Stay Updated
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This piece was originally posted in The Good Investors.
