I read an interesting comment Coach Frank Martin made to his U.S.C. basketball team after losing a couple games towards the end of the regular season. He told them, “adversity is part of the deal”. Indeed, that is so in every aspect of life. If the stock market goes down a few days in a row, that’s part of the deal. It should be expected, anticipated, and embraced. Coach Martin’s team used adversity as fuel for the most exciting postseason run in the history of Gamecock basketball. The very same lessons can be translated into your approach towards investing.
If you pay any attention to the financial media noise on a day-to-day basis, you are left with the impression that markets should only go in one direction and that it is “news” when they don’t. Of course, that is objectively untrue and even the expectation of markets only moving higher can easily become a problem. Investors worry about the markets; they worry about their futures and the markets.
What if there was an antidote to this needless worry about the markets? In medicine, an antidote is administered to stop the harmful effects of a poison. Within the context of financial planning and investing, worry can lead you to react to something you heard or read in the media. Assuming that your purpose for investing is something years into the future, why should you care if the market goes down today? Plainly put, the financial media is in the business of filling space/time and sensationalizing even mundane market events. Their best interest may not be your best interest. The media can easily poison your plans and your perspective.
The antidote to worry is doing, taking action. That is, taking very specific action steps needed for your future. These actions will very likely entail accepting some level of risk in order to achieve long-term above inflation returns. One of the necessary action steps is to stay invested across all types of markets. Yes, this means staying invested when “adversity” strikes and the market declines. Remember Coach Martin’s message,” adversity is part of the deal”. If you expect it, you won’t react to it. That’s the antidote. Ready for a real conversation?