“The markets take the stairs up and the elevator down” by Tim Egart
“The markets take the stairs up and the elevator down.”
While this saying may be over-used, it helps to convey the speed at which markets can seem to turn against you. After volatility held near record lows over the past year, we saw two days last week where the DOW was down over 1,000 points. It’s a sharp reminder that investing in equities isn’t always as smooth as we saw in 2017.
While it’s easy to say, but hard to practice – remember that the day to day performance of the market shouldn’t rattle our cage. Volatility, as Carl Richards’ illustration below rightfully points out, is normal.
Charlie Munger once said, “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
During bouts of volatility, it’s important to be disciplined. The average intra-year drop on the S&P 500 is 13.8%1. We may or may not exceed that figure. Either way, keep the faith and don’t be “stupid.”
During seasons like this, my heart goes out to the many families who don’t have a plan…
– Tim Egart
1 From J.P. Morgan’s Guide to the Markets, page 12. Intra-year drops refers to the largest market drops from a peak to a trough during the year.