Ok – I tried to write this blog three times with various themes from history to economics to investing. Here are my final comments as of today, as with investing – you must have faith in the future to be an investor. Logically you have to believe that as bad as it seems in the moment – the future will be better. So, for now, I lean into faith. Faith that calmer heads and smarter decisions will prevail – painful as this is, keep your eyes on the horizon not on the immediate step in front of you as investors.
In my 37.5 years, I’ve witnessed irrational fear of the future or a loss of faith – from Black Monday, October 1987, 9/11, 2001, as well as 2008 and 2020. These were times various discussions on cashing out, hiding out, riding it out were discussed. These actions actually feel better in the moment – why wouldn’t you do this? Because the courage to reinvest into stocks or even bonds is a greater mental barrier than the calm achieved with selling to “safer” investments when you are in the middle of crisis. Behavioral finance studies this effect and we adhere to the principles of various signs of erroneous thinking. We all have bias with investing, we are emotional when it comes to money – no matter how disciplined, we are impacted by the noise around us and the relationship we have with money. A few good authors in regard to their money are Dave Ramsey, who is well regarded for his back to the basics on money management and my favorite insightful author, George Kinder. His “Seven stages of money maturity” as well as his “Three Questions” are foundational insights on our relationship with money.
For a deeper understanding of possible historic parallels, Strategas, a Baird macro research company, writes a piece from 1961, 1962 – well before many of us can recall. CLICK HERE to read the article.
Finally – for now, deep breathing and a “walk away” from a close review of your money matters is permitted and recommended. Unnecessary over worry is not productive for your investment portfolio while we are in the midst of economic uncertainty - nor is it healthy for you.
Keep the faith.
Jean