Is This Different?

Here we are.  Deep in a crisis.  A crisis that no one predicted.  Things are really scary right now.  The world appears to be falling apart around us.  The news is apocalyptic.  The markets’ response has been to fall precipitously.

This feels different. 

It is different. 

It’s always different. 

It was different in 1987 when the market fell 22.6% in one day.  It was different in 2001 when four planes piloted by terrorists were hijacked and two of them were flown into the Twin Towers.  It was different in 2008 when people hoarded cash because banks were going bust overnight. 

This is different.  Except it’s not. 

It’s not different because we will get through this.  We will get through this together.  The human spirit, human grit, will prevail as it always has.  The stock market reflects the human spirit and our collective human ingenuity.  It will recover the way it always has.  When is that day?  I don’t know.  But here’s something important to understand about markets.

Markets move on expectations.  They are fed by human emotion, by greed and fear.  And they overreact in both directions.  What this means is that the markets do not need the news to be getting better before they start climbing again.  They don’t need the dust to settle.  They don’t need a vaccine to be found.

What they need is for the news to just be a little less worse than they are expecting.

The markets need to start hearing stories of people recovering.  They need to start hearing that the treatment protocols are getting better.  They need to start believing that China really has come through this.  They need to start seeing Italy slow down the rate of infections.  They need to start having confidence that Trump really is rolling out testing to everyone.

This news is coming.  It’s started to come already.

I am not saying that things are not going to get worse.  They are going to get worse.  In the UK and the US the worst is yet to come.  The economic fall-out is going to be considerable.  But the market has already discounted a great deal of this.  The market is anticipating what is coming.

I never said investing was easy.  I have always said it’s simple, but not easy.  The principles are simple, the application is anything but easy. That’s why you hired me.

So let me remind you that the enduring principles of equity investing are the same today as they were one hundred years ago.

Faith, patience and discipline.  That’s all you need.  Faith, patience and discipline.  And a healthy dose of humility.    

Have faith that this time isn’t different.  Have faith that the human spirit and human ingenuity will prevail. 

Be patient whilst the market recovers. We are not in a hurry.

And stay disciplined.  If your plan calls for monthly or quarterly additions, keep buying. 

Finally, you know this, everyone knows this…..the golden rule.

Buy low, sell high.

Don’t do the opposite.  Please, please, whatever you do, don’t do the opposite.  Don’t hit that button.  Betting against the human spirit and human ingenuity has never paid off.  Never.  We can’t bet against it today. 

My phone line is open - any time of the day or night. If you need to talk, if you need reassurance, please call me. Don’t hold back. This is what I am here for. We will get through this together.

Stay healthy all of you.

Sending virtual hugs.

Georgie