Lessons From 2009 To Guide Decisions Today

March 9, 2020

“History doesn’t repeat itself, but it sure does rhyme.”
~ Mark Twain

Eleven years ago today the most hated and under-invested Bull Market in history began. The low in 2009 came in the wake of what became known to this generation of investors simply as “The Financial Crisis.”

Fear, panic, uncertainty and outright “catastrophizing” by the expensive suits on financial media outlets were freaking out, talking faster and with higher-pitched voices. The graphics techies featured big red banners with tidbits of “Apocalyptic news” scrolling under the furrowed brows and despairing faces of all the talking heads. All of these are on full display today.

The lessons from March 9, 2009, and from all previous major market declines, are essential guiding principles that must guide PRUDENT investor behaviour RIGHT NOW:

  • Risk is lowest when prices are lowest;
  • Fear and panic do not last forever. This, too, shall pass;
  • When Chicken Little is running the markets and investors are “running from the fire” and willing to “end the pain” by selling the shares of great quality companies at whatever price someone will pay for them, the smart money is using available cash to buy at silly discounts;
  • We never know exactly where the ultimate bottom is until we’re past it, but when retail investors are “purging” the contents of their portfolio, one doesn’t need to wait long for things to stop getting worse, and institutional investors (the “Elephants”) eventually do step in with their big money and help to create the floor for the next move upwards;
  • Equity Market declines are temporary, but the advances are permanent…so don’t mess up your long-term results by joining the panicking masses;
  • Market plunges like this can be viewed as “loading a spring,” creating a significant amount of “stored energy” for a recovery. Some analysts call the signals generated in environments like this as “Springboard Buy Signals”;
  • Martin Armstrong has frequently mentioned that a “Slingshot Move” to the upside is highly likely following the declines off his Economic Confidence Model’s (ECM’s) key date of January 18, 2020. And,
  • Some elements of our well-diversified portfolios are either rising or extremely stable. $USD holdings and currency hedges are also buffering the downside. This is exactly why our very prudent Portfolio Managers always insist on holding securities that are NOT stocks.

Actions to Take RIGHT NOW:

  • Add cash to your investment portfolio if you have some available for long-term investing
  • If you don’t have new cash available right now, then simply allow our Portfolio Managers to do their job without interference. This allows them to remain focused, objective, calm and stoic. It will also allow your portfolio to recover robustly once the bottom is in, whenever that unfolds.
  • Manage your own personal stress levels:
    1. Minimize how much financial media you watch
    2. Resist the urge to obsess over your portfolio’s daily moves, because watching too closely will only increase your feelings of powerlessness and could lead you down the path of doing something that could be financially destructive
    3. Get outside for some sunshine and fresh air, even if it’s a little bit chilly. Being out in Nature puts everything in perspective, and is very soothing to the soul
    4. Listen to some uplifting music

If you would like to chat with us, please reply to this note with the best phone number for us to reach you.

Patience and Discipline are accretive to your Wealth, Health and Happiness; so focus on these.

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