A note from Bob on March 21, 2020
A couple of weeks ago, the S&P 500 entered “bear market territory” by closing down 20% below its previous all-time high. We have been reminded what seems to be hourly of this truth by the financial press. Maybe it’s just me, but it appears the primary function of the headline writers for journalists today is to terrify us out of ever achieving our financial goals by investing in equities.
Today as I write this letter to you, the S&P 500 is down 32% from its recent high in February. The equity market has done this, by my count, about one year in five since the end of Word War II. Every bear market has its unique precipitating causes; this one is driven by the coronavirus.
Neither I nor anyone else can predict when, where or how this bear market will bottom out. We can only observe the historical fact that sooner or later, they all have. As long-term, goal-focused investors, we are given a choice: 1) to be guided by the totality of the historical record, or 2) to be guided by today’s catastrophist headlines. I choose history. I assert my believe that “this time” is not, in fact, different.
You would not be human, I don’t think, if you didn’t experience some degree of fear at the direction of current events from time to time. Granted, there are likely some difficult days and weeks ahead as quarantines and lockdowns grow. However, the greatest achievement, at times like this, is simply not to give in to the fear. In a very real sense, a large part of my job is helping you toward that achievement. So, my mission continues: not to insulate you from the short- to intermediate-term volatility, but to minimize your long-term regret.
Our clients are holding up very well. Our phones are not ringing, and panic has remained at bay. If you would like to chat, please feel free to give us a call. If you know of someone who is struck with fear and needs direction or you feel may benefit from our message, please feel free to share this communication with them and let them know we would gladly speak with them as well.
In closing, let me share with you a quote from the 2016 Annual Report of Berkshire Hathaway:
“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold.” –Warren Buffett
It’s starting to rain gold.