Good morning & happy Monday!
Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.
Dale Carnegie
I was recently talking with my 2 boys (ages 10 & 8) about their schoolwork. One of them was commenting (I would call it complaining 😉) about how hard the work was getting.
I decided this was a coachable moment, so I asked a simple question: “What is something you have accomplished in your life that you are very proud of?”
My 10-year-old son thought about it for a while and said he was very proud of his first huge hike he and I took in the Grand Canyon on December 30, 2020. We hiked the Bright Angel Trail to Plateau Point … 13.3 miles with an elevation gain of 3,402 feet (roughly 2/3rds of a mile vertically), starting just before sunrise and finishing just before sunset, not to mention icy path conditions … it was quite a journey. We were exhausted after that hike, my step counter said I walked 37,572 steps that day … and they were tough steps. If you can spare 1 minute, please watch these to 2 videos (less than 30 seconds each) from that hike, one at the beginning of the journey and one at the end:
Link # 1 – start of the journey – https://youtu.be/l1hxhN9mGG0
Link # 2 – end of the journey – https://youtu.be/KKSLCO9rCyc
Look at how excited he was to get the journey started and how exhausted he was as the journey concluded 9 hours later. Looking back now he will tell you that was one of the favorite days of his life, but while we were walking back up the canyon there was lots of “I can’t do it,” “this is too hard,” “no way I can finish this” types of comments he made. The last mile I had to hold his hand and borderline drag him. But he did it, and now it goes into his life highlight reel. 😊
My friends, nothing worth accomplishing is easy.
Marriage, raising children, career accomplishments, etc. these are all things that have all sorts of obstacles and challenges. But those obstacles are precisely why the victory is so sweet when we reach the finish line. There are no trophies on our shelves from easy tasks.
Think about it. What in your life are you most proud of? I would have to image it was not easy, in fact it likely was one of the most challenging things you’ve ever done.
This investing journey in 2022 has not been easy. It’s been downright challenging, and I am fully aware how exhausting it can be. We have watched our investment values drop at the same time the cost of everything has dramatically increased. It feels like every day the value of our portfolio is less and the food bill is higher. It’s times like these that are hardest as investors … it’s times like these that we EARN our lifetime returns.
I have so much to say on this topic, but I will try to keep my comments as brief as possible.
In my 42-year lifetime (January 1980 – August 2022) the S&P 500 has returned 11.64% (with dividends reinvested). Check it our yourself … type in your birth month & year to get your figures: S&P 500 Return Calculator, with Dividend Reinvestment (dqydj.com)
9 of those 42 years were negative, including 2008 with a loss of 38.49%. That means that roughly 21% of the years in my lifetime the stock market has been negative. (S&P 500 Historical Annual Returns | MacroTrends – this site will be referenced multiple times through the remaining email).
I want to spend another moment here because it is so critical. 2008 was the worst stock market year in most of our lifetimes (must go back to the -38.59% in 1937 for a worst year). 2008 was way worse than what we are currently experiencing in 2022 … but what did it lead to? One of the longest, most profitable bull markets in history!
History teaches us the worse the pullback the bigger the recovery. The 1970s were really rough, the 80s & 90s were absolutely amazing! February 19, 2020 – March 23, 2020 we saw a 30%+ drop in S&P 500 values, but the rebound was so strong that 2020 turned into a very positive year (+16.26% not including dividends). The market goes down and then the market recovers and goes on to new all-time highs … history can teach us no other lesson.
As painful as the market pullback has been this year, I wholeheartedly believe it positions us for the next season with much bluer skies. But, and this is a HUGE, BUT we must be patient.
That is today’s main message and one of the biggest lessons I have learned in my career … there is no substitute for patience when it comes to investing. Patience and successful investing go hand in hand, you can’t have one without the other. I have never met a successful investor who is impatient, but I have encountered lots of impatient investors who are exceptionally unsuccessful investors.
This is the time it matters the most, this is when the rubber meets the road … can you be patient enough to ride out the storm? I will do everything I can to encourage and support you to do so.
As Warren Buffet wisely and accurately stated “The stock market is a wonderfully efficient mechanism for transferring wealth from the impatient to the patient.”
Please, please, please … be patient … patience is rewarded!
Just like my son finishing his 13+ mile hike in the Grand Canyon, the reward was worth the struggle. I believe struggling though this challenging market will be worth it in the end.
If there is anything we can do to support you along this journey please do not hesitate to let us know.
Thank you, make it a great week ahead!