Investing is not the same as gambling.
In response to recent questions of “when will our portfolios recover?”, we most often say, or convey, that we are confident it will happen, we just don’t know when. From whence does this confidence come?
Our Confidence Comes from Experience and Knowledge
From our experience, we have lived and worked through multiple bear markets. Since I started in the business in 1989, there have been at least half a dozen 20% or greater drawdowns in the stock market. While each one of those bear markets were difficult to live and work through, they all recovered and surpassed their previous highs.
This is something we have experienced – on many occasions.
From our knowledge, we understand what it means to be a prudent investor in the financial markets: We are passive owners of real companies, made of real people, which have a mandate from us (their shareholders) to make a profit. While all of these companies may not thrive or even survive, by owning the vast majority of them, we will be the beneficiary of the growth and profits that come from the markets as a whole.
This is something we know – with confidence!
So, while some may claim that investing is akin to gambling, experience and knowledge tell us otherwise: Casinos pay out less than what customers wager (put in), while the financial markets reward prudent long-term investors with real returns on their money that compounds over time.
As we head into another year amid a multitude of concerns, we have confidence that the sun will rise again on our portfolios – it just takes time.
Mistakes are avoided with wisdom.
Wisdom comes from experience.
Experience comes with having made some mistakes.