During at least one unpleasant period in the markets, you probably heard us repeat the mantra, this too shall pass. It goes without saying we can’t take credit for penning that phrase, but we nevertheless subscribe to its underlying meaning. When the financial world seems to be entering another tailspin from which it can’t possibly recover, we remind you that ‘this too shall pass’ not as a vapid platitude, intended to help comfort you in the moment. Instead, we deliver those words, because, while we can’t guarantee how markets will perform, our education, research, and perspectives formed from numerous, nearly-identical instances in the past all converge to substantiate the validity of that phrase.
2018 was a doozy. For many investors who chose to let the market’s unpleasantness pass, declines in performance were temporary and many portfolios have regained the value lost in 2018. For investors who chose to sell however, those temporary declines in value were solidified. As we’ve said before and will reiterate in the future, market volatility is critically important. We expect to see the market temporarily decline, because history has demonstrated to us that these declines ultimately facilitate long-term growth. Long-term growth, however, is possible in the absence of selling into a down market.
When another unpleasant period in the market comes around, and we say with confidence that it will at some point, we want you to remind yourself of the mantra: this too shall pass. We know it’s easy to preach mindfulness in retrospect, so as we’ve asked of you before, rely on us to shoulder your concern when it feels like this too will pass.