When times are good it is easy to listen to yourself. When things are going well for me, I contort my arms around to pat myself on my back. When things are going poorly, it is too easy to twist that pat around into a punch, hitting myself for not anticipating every possibility. I don’t do that as much as I did years ago, but friends know where to look for the occasional self-inflicted bruise. Lately I am going back to various founts of wisdom that have been through worse and come out much the better.
For anyone that’s read my book (Dream. Invest. Live.) and memorized it (Ha! Don’t think I expect that!) the following names will be familiar: Peter Lynch, Warren Buffett, Louis Rukeyser, and the Fools. Their wisdoms have considerable overlap, and they also don’t completely agree, but they all have advice that heartens me when the portfolio is low.
Peter Lynch, one of the most successful fund managers and also a good author, is well known for telling people to trust their knowledge and experience when investing in stocks. Consumers create trends, so any shopper has the opportunity to spot good companies before the analysts have done any research. As for down times,
“I’ve found that when the market’s going down and you buy funds wisely, at some point in the future you will be happy. You won’t get there by reading ‘Now is the time to buy.'”
I took that advice and substituted “stocks” for “funds”, which is logical because it is easier for me to track a company and its stock rather than a fund and its manager. It also makes sense that he said that about funds. He was a fund manager. He was in the mutual fund business. And he produced stellar returns.
Louis Rukeyser passed away a few years ago. For decades he hosted a finance show on PBS called Wall Street Week. It was fun. It was entertaining. he made sure the guests and pundits spoke English instead of economics. He was on the other side of the interview after the internet bubble burst and investors were fleeing the markets. CNBC had him on with some other panelists who were debating where the market was going. Was it going to crash, stagnate, or bounce back? Most of the panelists launched into various theories, which were really speculations. There wasn’t much “theory” behind them except their opinions, but it made for a lively show. And then Louis spoke. He had his own spin on Peter Lynch’s comment which went something like this (sorry I can’t find the quote),
“The people who are investing now, are the people who will be rich ten years from now.”
After that comment I quit listening to the booyah pundits. (By the way, I think it would be more correct to switch Louis’ comment to say that the people who are rich ten years from now are the ones who are investing today, but let’s not quibble.)
Warren Buffett, a name more recognizable than most because he is the third wealthiest person in the world (he was #2 in 2009, shucks), gets to play with big numbers and buys and sells companies, whether they are public or private. He is also humble and affable. He also had advice for individual investors that applies in booms and busts,
” . . . if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful. “
All of these wise guys stressed investing for the long term, looking at the companies before looking at the stocks, not worrying about the markets too much, and maintaining a sense of humor through it all.
The world looks fearful. I won’t energize the fears by listing the menu selections of dramas. Besides, any list is out of date within a day, a week, or a year. Last night I watched Mrs. Miniver, a movie I’d never heard of, but it came in a boxed set of other classic movies on DVD that I got myself for Christmas last year. It told the story about a town in England during the first few years of World War II. Their fears were more immediate. Terror wasn’t abstract. Terror fell in bombs from hundreds of planes. It was a black and white movie, not for effect, but probably because it was filmed in 1942, during the war, during the rationing. They didn’t know how their world would turn out. Nazi Germany was ready to invade with tanks instead of car bombs. England survived, and they survived because they persevered.
Markets go up and down. I think the markets have a long climb ahead of them, and that’s good. I want the markets, and particularly my portfolio, to go up.
Moods go up and down. Thanks to my vacation in Scotland, my mood is moving up as well (except for a temporary but major drop caused by an anxiety attack tied to health care – my body’s fine, but my psyche got whacked). For me, the trick is to look at the long term. Two years ago my portfolio was worth about a third of what it is now. Two years from now, who knows? Could my portfolio triple again? Well, yes, extraordinary things happen.
In the meantime, if you can’t get in touch with Peter Lynch, Warren Buffett, and Louis Rukeyser, then try web sites like the Motley Fool and Investor Village. There you can find people that more accessible, probably with less stellar credentials, but who are more likely to understand you because we are all in this together; and whether it is stocks or other troubles, “we” are more powerful than a bunch of “I”s. Listen to them and keep in mind that at some level in some field, you are one of “them” too.