By Allen Giese
We just passed the one-year anniversary of the pandemic’s bear market low. On March 23, 2020, the S&P 500 was trading below 2,200. Today, as I write, the S&P 500 is at 4,155—nearly double in about 13 months! There were a great many people who wanted to sell back in March 2020, and many out there did. With a couple of statistically inevitable exceptions, our clients did not.
We continuously counsel faith, patience, and discipline, acting on our plan and not reacting to markets. In retrospect we see, over and over again and not just with last year’s market drop, how that approach prevails.
Somewhere, deep down, we all knew that the right advice back in those dark days of March 2020 was to stay focused on the long term and not be driven by the short term, even though we couldn’t begin to tell how, where, or even why a sell-off or decline was going to burn itself out. Back on March 23, 2020, the Federal Reserve supplied the answer: that there would, in effect, be no limit to the extent that it would supply liquidity, directly or indirectly, to the credit function and the broader economy. We could not possibly have known they were going to do that. No one did. Yet our counsel to stay the course, focused on long-term goals, relying on our principles, inevitably proved right, as it consistently has.
Can you imagine—or perhaps I should say can you remember, for many of you have been there—the ceaseless anxiety tied to investing whose value proposition is tangled up in the spider’s web of picking the right kind of stocks and being in or out of the market at the right time? Being constantly focused on conflicting economic forecasting and market prognostication that more times than not turns out to be wrong? Being focused on “hot picks” and piling in only to see them decline?
That is, to some extent, the way the majority of investors (and advisors) live. And why? Because they’ve been led down the wrong path of understanding how markets actually work by a financial services system that is designed to make money off of investors first, and allow them to gain wealth second (if there’s any wealth left to be gained).
So to all of you who stood your ground, invested based on your principles of faith, patience, and discipline, we applaud you! Your real reward is not just a healthier investment account and more rewarding investment experience, but the absence of the anxiety that comes with an investment philosophy built around false pretenses and principles of how global capital markets deliver returns.