The last few weeks have been straight out of a movie and almost unimaginable in terms of how quickly all our lives have changed from a social standpoint. When it comes to investing, we have seen many events in the past that caused markets to panic. The one thing these market events have in common is that they unfold in different ways. As an investor, the key is to have a strategy and a plan. As the saying goes, ‘Fail to plan then plan to fail.’
As I write this article, our markets are extremely volatile, seeing declines over a short period of time that have never been seen before. In times like this, it’s human nature to panic, worry, doubt and in some cases, make irrational decisions. As I’ve written before, I love reading and studying anything Warren Buffett with regards to investing. He has a poem he references that applies to times like this:
“If you can keep your head when all about you are losing theirs…
If you can wait and not be tired by waiting…
If you can think and not make thoughts your aim…
If you can trust yourself when all men doubt you…
Yours is the Earth and everything that’s in it.”
~ Rudyard Kipling
These emotional decisions happen, and they happen to a greater extent when people don’t have a strategy or a plan. A strategy is built on a strong foundation anchored to certain goals and time horizons. When building this strategy/plan, you should base it on facts and not emotions. As the poem says, “If you can keep your head when all about you are losing theirs…,” which is what the strategy will help to do.
The good times are easy for everyone, and even if you don’t have a plan, you can most likely achieve decent results; however, when things turn south, which they inevitably will at some point, it is your plan and the strategy that are your guiding light to keep you on the path. Your plan will help you to be patient and think clearly. Your plan will help you trust that you will make it through whatever rough times may come.
In closing, I would like to leave you with something to think about. A couple months ago, I was at a work conference, and we had a guest speaker who was an economist. He told us to imagine that the year was 2000, and we fell asleep until now and just woke up. Among all the changes that occurred in this short period of time were invention of iPhone, flash drives, Google Maps, Human Genome Project, YouTube, electric cars, driverless cars, Uber, 3D printing, stem cell research and many more life changing things.
This happened throughout a few very difficult times that included the bursting of the internet bubble, 9/11 and The Great Recession. Each event was different than the past and each event heralded an uncertain future; however, through all of this, innovation happened; our world became more efficient and stronger after each event.
Today’s event, in my opinion, will not be any different. We will have a lot of advancements that come through this very difficult time, and my thoughts are if we fall asleep again for another 20 years we will awake to a world with many great inventions that advanced us to become more productive and prosperous.
~ Lee Williams offers products and services through Nowlin and Associates. He also offers securities and investment advisory services through Ameritas Investment Corp. (member FINRA/SIPC), which is not affiliated with Nowlin and Associates. Contact him at 334-703-3454 or firstname.lastname@example.org.