I had lunch with a client earlier this week. In catching up, the King’s Dominion type roller coaster market we’ve witnessed lately was an appropriate discussion topic. Before I could weigh in, they facetiously stated “I already know your answer: Do Nothing!” What can I say? They took the words right out of my mouth. We both laughed but I couldn’t help but acknowledge that this was an incredibly boring, even lackadaisical, approach to something very serious. Do Nothing in a time of turmoil runs counter to the traditional decision making process we¹ve all shared for years. Where to go to college? Where to live? Where to eat dinner? Big decisions and small decisions typically follow a similar decision making process. That is, we¹re rewarded for our due diligence and research. We seem to be telling people the ordinary decision making rules we¹ve all followed for years don’t apply to investing. How convenient for us!
It’s certainly not our intent to flood your inbox but I wanted to point out we’ve made lots of decisions together. Each one based on your specific situation. Doing nothing during times of turmoil is actually a decision we¹ve consciously made. Research shows this approach will reward us over time. Here are a few items I came across this week to help highlight this.
This is a great 2:28 audio file. Carl explains we’re not crazy for doing “nothing” and that we¹ve made lots of decisions leading up to this moment in time.
John Hancock sent me some good information on the importance of staying invested throughout all market cycles. I’d like to specifically point out the following Interactive Graphs:
- The Trouble with Market Timing Being out of the market and accidentally missing only a few of the biggest days from a return standpoint has a large impact over the long term
- The Importance of Diversification Picking winners and losers each year is challenging. Proper diversification is critical.
This video is a bit technical but highlights the challenges of consistently predicting markets.
We hope you have a wonderful weekend and commend you on the resolve you’ve shown over the last few weeks. I leave you with the following quote from a well respected investor. I¹m not sure we¹re ready to adopt this as our company slogan, but we do find it amusing!
“Benign neglect, bordering on sloth, remains the hallmark of our investment process.”
Jeffrey A. Hahn