Ignore Everything

November 09, 2020

The hardest work in investing is not intellectual; it’s emotional. Benign neglect is, for most investors, the secret of long-term success. – Charley Ellis

I read a really good blog post today, written by financial planner Ashby Daniels titled –

Actually, …it was that title that I really liked.

Many of you may be familiar with the table below of market and economic concerns we have chronicled, dating back nearly fifty years.

History Revisited
49 Reasons Why People Did Not Follow Their Investment Plan.

  • 1972 Dow Tops 1000 – Market too high
  • 1973 OPEC Oil Embargo – Gas Lines & Energy Crisis
  • 1974 Watergate, Impeachment, Nixon Resigns
  • 1975 Deep Recession in Progress
  • 1976 Limits to Long-Term Growth
  • 1977 Inflation Increases
  • 1978 Interest Rates Rise Dramatically
  • 1979 Iranian Revolution – Oil Prices Soar
  • 1980 Interest Rates and Inflation Soar
  • 1981 Deep Recession Begins
  • 1982 Recession Worsens
  • 1983 Market Prices too high
  • 1984 Record Federal Deficits
  • 1985 Economic Growth Slows
  • 1986 Dow Nears 2000 – Market too high
  • 1987 Black Monday – Market Crashes 20% in One Day
  • 1988 Savings and Loan Crisis
  • 1989 Bank Failures Increase
  • 1990 First Persian Gulf War
  • 1991 Dow Tops 3000 – Market too high
  • 1992 Global Recession
  • 1993 Hillary Clinton’s Health Care Reform
  • 1994 Mexican Currency Devaluation
  • 1995 S&P 500 tops 629 – Market too high
  • 1996 Greenspan warns of “Irrational Exuberance”
  • 1997 Asian Financial Crisis
  • 1998 Russian Currency Devaluation
  • 1999 Presidential Impeachment
  • 2000 Technology & Dotcom Meltdown
  • 2001 9-11 Terrorist Attacks
  • 2002 Corporate Malfeasance – Enron & WorldCom
  • 2003 2nd War in Iraq, SARS virus
  • 2004 Decline of Dollar
  • 2005 Hurricane Katrina
  • 2006 Rising Gas Prices
  • 2007 Subprime Mortgage Crisis
  • 2008 Credit Collapse and Great Recession
  • 2009 Collapse of Major U.S. Financial Institutions
  • 2010 European Debt Crisis – Greece
  • 2011 Downgrade of U.S. Debt
  • 2012 Extreme Political Polarization in U.S.
  • 2013 Mideast Turmoil and Wars Escalate
  • 2014 ISIS Terror Escalates – Ebola virus
  • 2015 Oil Prices Collapse – Isis Strengthens
  • 2016 Extreme Political Election Acrimony
  • 2017 Dow nears 25,000 – Market too high
  • 2018 Rising Rates, Trade Wars, Political Disfunction
  • 2019 Presidential Impeachment, Slowing Global Growth
  • 2020 Coronavirus Pandemic – Polarized Electorate

That’s simply the way of the world. There always has been – and always will be – something to worry about. Always. If you want to worry, fine, but don’t react.

Even if you had a perfect crystal ball giving you the outcome and resolution of the list above ahead of time, it would do you no good. That’s because markets price in and react to events in ways that are often surprising – utterly obvious when viewed through the rear-view mirror, and anything but when viewed through the windshield. The financial markets do a really good job of assessing and adjusting to life’s concerning situations long before you or I are even aware of them.

Reacting to economic worries, letting them jerk your string, can be a surefire way to derail your financial life. If there’s always something to worry about, there is always something to react to. So as you continue to worry, when do you stop reacting???

Through all of the thick and thin of the last fifty years (or actually, if you want to expand on this, through…forever), our financial markets have generally rewarded the thoughtful, disciplined, long-term investor versus those that react to ongoing tribulations. Understanding this is really important. In fact, your financial life depends on it.

So, don’t succumb to the hysteria created by “tomorrows footnotes”. Do develop and maintain a sensible allocation for your investment portfolio that can support your plans and goals.

Then – leave your plan alone, and let it work.