As we enter the second half of the year, please read what our Partner/Advisor, Matthew Staub, has to share about his thoughts on investor behavior during periods of market volatility.
In May of 2009 I finished up my 3rd year at Lebanon Valley College. Heavy with anticipation for a few months of internship, odd work, and travel – I moved the last of my collegiate possessions out of my Derickson B apartment, crammed them into a ridiculously impractical Chevy Colorado short-bed truck, bid farewell to my roommates, and headed off.
Before going home, I had plans that afternoon to meet a good friend in Hershey for a Bruce Springsteen concert. I arrived at the fields outside Hershey Park stadium around 4:00 PM and left the uncovered truck of possessions unattended as I walked through the crowd of tailgaters. I didn’t own anything of value at the time and my concerns were elsewhere. After a solid half hour I finally spotted the distinct blue and old gold flag of my good friend’s alma mater, grabbed a Troegs Perpetual and joined in the singing of every Springsteen classic we would hear at least 2-3 more times before the night was over. After 5-6 hours of yelling, singing, laughing and all-around pure joy, it was time to go. I said goodbye to another group of good friends, found my truck (low-value possessions not surprisingly all accounted for), and made off for my family home in Glenville.
It was past 11 PM by the time I parked at the farm and saw my father moving up the walkway to meet me. Resolved to again leave all my worldly possessions where they lay, I made my way toward the house to meet him. He asked where I had been, and I reminded him about the concert. There was no response – he simply turned and walked slowly back to the house. I brushed off a moment’s confusion wondering if I had done something disappointing and followed inside. I made my way down to the kitchen where I poured a glass of water, and as I looked up at my father again the look in his eyes was telling. The pit in my stomach formed right there – It wasn’t anything I had done, but something was off. He went on to tell me that my grandfather (on my mother’s side) had died earlier that day. My stomach dropped completely. I had called mom on my way to the concert in Hershey, my excitement more than audible, not knowing she was at the hospital after her father’s death – “How selfish and unaware of me”, is all I could think. That revelation was then followed up with a completely unexpected sucker-punch, as shortly thereafter my father told me that my mom had cancer. Stunned silence.
The next couple days were a blur processing what happened and what was going to happen. When I finally spoke with my parents about the road ahead, what it meant for our family and personal plans, what I may need to change or adjust, the response was just two words.
These two simple words offered to me in a time of uncertainty and anxiety have stuck with me for the 13 years since. Whether uncertainty arises for personal or professional reasons, the words “ever forward” are front and center in my thoughts.
I think about that day often, and always when facing adversity in my chosen line of work. The progression of that day, as I recall it, parallels the market chaos that from time to time dominates my professional usefulness in this world. A wave of excitement and optimism, a defining memorable moment, sudden uncertainty, questioning, and finally (not to mention most important), resolve.
As humans we inevitably encounter moments in life that test our resolve. As investors, we encounter the same with no less (if not more) frequency, but the way many of us handle these moments differs drastically depending on whether the issue is one of a personal or investing nature. When faced with an obstacle in life, there is no proverbial off ramp. We cannot, as millennials often say, “get off this ride”. The incentives of real life are at least somewhat aligned to encourage the “forge ahead” mindset. We don’t always get through unscathed, but we get through.
Investing obstacles, on the other hand, can be met through a path of short-term least resistance. We can push that trade button and sell, fleeing at least temporarily to the solace of cash. The short-term nature of financial news, the game-ification of investing platforms, and the get rich quick instant gratification mindset that grips so many only add fuel to the fire when turbulence strikes and push towards that simple solution of short-term safety.
Unfortunately for those that choose this path, this is almost always the wrong choice. Market turbulence is a poetically variable constant. It’s always present, ebbing and flowing, spiking and falling. This current round of volatility, you will be told, is different and somehow worse, emphasizing a culminating finality, but it is not. The hundreds of bouts of volatility before it were not the harbingers of doom so many predicted, and this won’t be either.
There will be uncertainty, and you’ll question the investing decisions you’ve made and your plan going forward, but at the end of the day it’s important to be a student of history rather than its next victim. Our financial well-being is a critical part of our personal well-being – the two are tightly intertwined. Why then, should we behave differently or change our mindset when turmoil or uncertainty hits either? Align your investing behavior in times of uncertainty with difficulty anywhere else in life. When the storm hits, when the darkness sets in, the only way is through – Ever forward.
If you or someone you know has questions about the current market state or need some financial guidance, please give us a call. We are here and ready to guide you through this. Ever Forward.
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