Move towards your fear

DOUG  By Guest Blogger Doug Rowat
.

In July, we received this email:

[We] have come to the decision that we would like to stay on the sidelines in the stock market until the long-term effects of COVID go away.
We are avid followers of Garth’s weekly conference calls and we are well aware that it is never a good strategy to try to time the market. However, we fundamentally do not share Garth’s near-future positive outlook on the markets, despite the silver-lining good news about recovery, pandemics are temporary, etc.

What we would like is to liquidate all assets in all accounts and keep the proceeds as cash in their respective accounts until further notice from us (which could be a while).

When markets are volatile and news headlines are frightening such client emails are not uncommon. But the problem with decisions like the one above are two-fold:

1) It’s an unambiguous wager on market direction (“liquidate all assets in all accounts”). This couple is saying with 100% certainty that they know where markets will go next (in this case, lower). But, of course, no one can be certain. I’ve been in the investment industry for decades and I’m never, ever positive of market direction. This is why we maintain balanced portfolios for our clients—to hedge against the unexpected. And, as if the investing gods wanted to illustrate the danger of an unequivocal outlook, markets have, of course, skyrocketed since this email.
2) It’s almost always the better long-term decision to invest MORE into the market when you’re feeling uncomfortable rather than less.

It’s the second point that I want to focus on here.

More wealth is created by moving towards fear than away from it. Investment journalist and author Ben Carlson notes that the best returns come when “the economy is getting body slammed” and he illustrates this point via the table below, which compares the US unemployment rate and market returns:

S&P 500 returns versus US unemployment rates

Source: A Wealth of Common Sense

Naturally, when the unemployment rate is elevated there’s greater discomfort surrounding investing, but that’s the point: when you feel most uncomfortable is usually when you should be investing more in the market. Similarly, in the midst of a recession it’s an emotionally difficult decision to add funds to your portfolio, but history tells us that that’s exactly what should be done.

Carlson examined US recessions going back to 1945 and noted that, remarkably, the S&P 500 trades higher more than 60% of the time DURING the actual recession itself with an average gain of 3.8%. Following the recession, of course, the returns are even more impressive. Given that recessions historically last less than 11 months, it’s pointless to try and market-time your way around them. On the contrary, it makes more sense to simply add to your portfolio (or at least rebalance it) during one. This will position it even better for the recovery:

S&P 500 performance post-recession

Source: A Wealth of Common Sense

I’ve made similar observations about the importance of buying on weakness and struggling through the uneasiness that accompanies such decisions by simply looking at the worst single-day declines for the S&P 500 over the past five decades. Should you run in fear when the S&P 500 plunges by 5%, 10% or even 20% in a single trading day? The massive pit in your stomach may make this your first impulse, but history says to use these opportunities to back up the truck:

The worst S&P 500 single-day returns over the past 50 years…

Source: Bloomberg, Turner Investments

There were actually four more days from 2020 that would have made the list above (see table below); however, we’ve not yet had a subsequent full-year of return history. However, here’s what the returns have been thus far:

…and a few more from 2020 as well

Source: Bloomberg, Turner Investments

Anyone want to bet that the returns won’t still be strongly positive when we get to the one-year mark? It would have been a very uncomfortable decision back in March to add funds to your portfolio, but investing on weakness (or at least rebalancing on weakness) was, once again, despite the discomfort, the correct strategy.

Helen Keller famously said that “avoiding danger is no safer in the long run than outright exposure”. And so it is with investing. You’ll feel better (temporarily) by raising cash, but such a decision will very likely only make you poorer in the long run. And with respect to your market re-entry point, waiting on the sidelines “until the dust settles” really means waiting “until my fear’s gone away”. But by the time your fear’s subsided, it’s already too late. The market’s passed you by.

There’s nothing wrong with being afraid. Just don’t let the fear win.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

 

60 comments ↓

#1 Dogman01 on 12.25.20 at 3:44 pm

#119 Nonplused on 12.24.20 at 7:27 pm

Jealousy is not a good look, and coveting is 3 of the top 10 sins of the 13 of the 10 listed.
And I suppose, a further question one might ask, is how do you propose they select a successor to run the Weston businesses? Were you expecting a call? Do you even know how to run a bakery?

————————————————-
You infer too much, not Jealousy and no need for ad hominem remarks.

Just a prime example where the principles of “equality of opportunity” and the argument that capitalism is a merit based system is falling down.
If Galen was named CEO of another company his family did not control well that’s an accomplishment.
But it appears through “birth lottery” rather than merit he now has a lot of unearned power in society.

Wealth beyond a certain point becomes power in society. It is not like you can spend $100 million on nice stuff.

Oxfam’s Billionaires list shows that most Billionaires have their wealth and power due inheritance, crime or cronyism.
https://www.oxfam.org/en/research/extreme-wealth-not-merited

The Elon Musk, Jeff Bezos and Bill Gates, self-made Billionaires whom create new innovations, are becoming proportionally rare.

I argue our society is moving from a Plutocracy to an entrenched super wealthy Aristocracy.(from bad to worse). The power of the super wealthy has been used to change the rules, lower their taxes and tilt the table further to their advantage over the last fifty years. (Trickle down being one such tilt).

Massive inequality and entrenched wealth\power is a dangerous trend, if capitalism does not maintained principles and its ability to deliver what is good for society then the rules need to be changed.

#2 espressobob on 12.25.20 at 3:45 pm

Contrarian investing.

Easier said than done.

#3 KNOW IT ALL on 12.25.20 at 4:15 pm

JIM Cramer

“There’s ALWAYS a bull market somewhere and I’ve spotted one here”

Merry Christmas!!!

#4 kommykim on 12.25.20 at 4:23 pm

Business has always liked it when there is high unemployment. A long line of people applying for the same job always suppresses wages.

#5 TurnerNation on 12.25.20 at 4:24 pm

The holidays: this glorious season Kanadians have the options of ratting out their neighbors and friends via dedicated snitch line, online form submission or even 911 – if the CV crime is of severity.
All these calls will ensure our First Responders are worked to the max during their shifts. Such that when serious calls arrive, they may already be exhausted, no time for lunch, or mis-postitioned around the city.
Let’s work those First Responders to the bone!

Well done guys. :(

#6 NSNG on 12.25.20 at 4:43 pm

You can’t fight the crowd. They make the market.

The crowd is usually right…except in the extremes.

#7 Leichendiener on 12.25.20 at 4:45 pm

Merry Christmas and all the best in the new year Doug. And yes, stay invested.

#8 Prince Polo on 12.25.20 at 4:45 pm

It must be very frustrating to have clients that pay you for your expertise, only to see them succumb to their own hubris. In a case such as this, does your firm get any additional paperwork signed by the clients to acknowledge that they are going against the advice of the Turner Investments brain-trust? How else to indemnify against their own mistakes?

Why hire a professional if one (foolishly thinks that one) knows best? Have your clients also done away with their dentist? Self-help teeth-extraction videos are how I roll….*rolls eyes*

Merry Xmas to the TI crew – this blog’s free advice is stellar!

#9 Tarot Card on 12.25.20 at 4:46 pm

Thanks for the blog Garth
Thanks for the post Doug
Merry Christmas everyone!

Yes fear is Huge, I honestly believed the entire economy was going to roll over in March. Luckily I wrote Garth and he said hang in there! And I did. As of today I am up 17 percent from January first.

Still nervous about next year so that means stay invested!
Good advice
All the best!

#10 Joe on 12.25.20 at 4:57 pm

I think the fear is justified this time. World is in trillions of debt never before seen and cannot be repaid. The printing press just keeps on printing. The economic fundamentals are so blurred now as a result of all the manipulation.
Who knows what will happen next. This isn’t a healthy market.

#11 NSNG on 12.25.20 at 5:12 pm

Heartland/Rasmussen Poll: Likely Voters Hate Socialism

75% of likely voters say free-market capitalism is a better economic system than socialism.

ARLINGTON HEIGHTS, IL (December 18, 2020) – A new poll by The Heartland Institute and Rasmussen Reports finds that a vast majority of likely voters prefer a free-market economic system over a socialist economic system.

When asked on December 6-7, “Which is better – a free-market economic system or socialism?,” 75% of respondents answered “free-market economic system,” while just 11% answered “socialism.”

Interestingly, most likely voters also have a decidedly negative view of one of America’s most prominent socialists, Rep. Alexandria Ocasio-Cortez (D-NY). When asked, “Do you have a very favorable, somewhat favorable, somewhat unfavorable or very unfavorable impression of Alexandria Ocasio-Cortez?,” only 18% said “very favorable,” while 19% said “somewhat favorable.” On the other hand, 38% of likely voters said they have a “very unfavorable” impression of AOC, and 20% said they have a “somewhat unfavorable” impression of her. About 15% said they are not sure.

Taken together, these results show that a strong majority of likely voters believe the United States should reject socialism and instead adopt free-market economic principles.

https://www.heartland.org/news-opinion/news/heartlandrasmussen-poll-likely-voters-hate-socialism

#12 Sail Away on 12.25.20 at 5:12 pm

Investment Christmas arrived fabulously in March and April.

Real Christmas also brings joy browsing through eviscerated corpses of unloved tax-loss value stocks. Such REIT and oil industry bounty this year!

The next market drop will be the same as the last: a few of us jumping up and down screaming BUY and the vast majority turtling up in quiet paralysis. Properly-exploited fear is always and forever profitable.

#13 Stealth on 12.25.20 at 5:27 pm

Thank you for posting the blog on Christmas Day, even if diligently prepared in advance :)

Merry Christmas.

#14 Stan Brooks on 12.25.20 at 5:28 pm

BANNED

#15 Linda on 12.25.20 at 5:52 pm

It can be tough hanging in there when the market looks to be imploding. I think it is easier to do if one doesn’t ‘need’ the money from investments short term.

#16 Dolce Vita on 12.25.20 at 5:57 pm

I mean, Doug you know I love your tables and charts. Comforting, long term view, etc.

But even you have to admit none of data in those tables were ever gleaned during a Global Pandemic (global as in even Antarctica the other day threw in on Covid).

Yes, yes other epidemics with more deaths buried within those time spans, etc. declared (e.g., HIV) but none of them with the intense FEAR that Covid has generated and the enslavement of an entire species, OURS, in order to defeat it.

Turns out a little vile is all it will take to smite it (and a couple of jabs).

Still, vainglorious as your Point #2 attempt was (though good logic) I like your spunk, willingness to say it will get better and that after all is said and done history is a good teacher even with investing (and I agree completely on your Point #1 observation, conclusion).

——————

Again Merry Xmas to all, and it is almost done here in RED ZONE Italia (the feast, not the Zone).

#17 tbone on 12.25.20 at 6:04 pm

For the last 30 + years i have stayed invested. It always
worked out ok.
One account i have with a financial institution is up 16 % ytd . I havent touched this account in decades.

Good luck to all in the new year .

#18 Interstellar Old Yeller on 12.25.20 at 6:05 pm

Love the Helen Keller quote, Doug. Great post with great charts to back up your position. I hope you convinced those clients to stay the course.

If you celebrate, merry Christmas to you and yours!

#19 mark on 12.25.20 at 6:21 pm

They only problem with this path, is the market in general globally is grossly overpriced valuation wise, not a great time to be adding anything with prices at all time high all over most markets!

#20 Nonplused on 12.25.20 at 6:28 pm

Doug, monetary policy is driving this boat so I agree it is best to stay invested. Come hell or high water we are going to get inflation, so with interest rates at near zero cash is a guaranteed loser. Good companies with pricing power will be able to prosper even given the inflation that is coming.

The rest of us will get our butts kicked at the Costco but that’s been happening for years now. It seems like every time Costco has a sale what they are actually doing is announcing a price increase (the sale price is the old regular price).

The covid recovery promises to be like something we haven’t seen since the 70’s. As Garth has been documenting a lot of money is piling up because there is no place (besides Costco) to spend it. But that is a forced savings rate, I don’t think people have actually become a bunch of frugal savers. So I expect to see price rises across the board once the covid crises is over.

I mean just try getting your hands on a Play Station 5 right now. People are buying them by the dozen when they can and reselling them online at huge markups, to the point where it is pissing Sony off. Of course the margin in gaming is not supposed to be the console, they practically give those away at cost, but the games themselves. But now that we are all stuck in the basement Sony can’t build them fast enough. I mean it was a highly anticipated release but this is ridiculous. Not that I game myself but my son has been watching this market intensely.

I went to EB Games to get a Christmas gift card and they had a Play Station 5 box on display with a sign on it that said “Sold Out”. I wondered at first why they would bother doing that but then I realized that it was probably so people wouldn’t bother asking.

So anyway I think cash is a bad place to be as covid goes away.

And Merry Christmas!

#21 Nonplused on 12.25.20 at 6:52 pm

#1 Dogman01 on 12.25.20 at 3:44 pm
#119 Nonplused on 12.24.20 at 7:27 pm

Jealousy is not a good look, and coveting is 3 of the top 10 sins of the 13 of the 10 listed.
And I suppose, a further question one might ask, is how do you propose they select a successor to run the Weston businesses? Were you expecting a call? Do you even know how to run a bakery?

————————————————-
You infer too much, not Jealousy and no need for ad hominem remarks.

Just a prime example where the principles of “equality of opportunity” and the argument that capitalism is a merit based system is falling down.
If Galen was named CEO of another company his family did not control well that’s an accomplishment.
But it appears through “birth lottery” rather than merit he now has a lot of unearned power in society.

————————————

I apologize for the ad hominem as your interpreted it. I wasn’t necessarily meaning to single you out as to criticize “jealousy politics”, which is what much of this comes down to these days.

I am not necessarily arguing with your points about how these things come to be but I wonder what you would propose as an alternative. “Tax the rich”? That is pretty much the only people they do tax other than through things like carbon taxes and the HST, which apply to everybody.

And who says Galen is not the best candidate for the job? He has a large vested interest (skin in the game) and I am guessing has been involved with the company for pretty much his whole life. Even if it were decided by the board that some other candidate would do a better job, Galen would still be a large shareholder and thus might decide who that person would be.

So while we might look at something like Apple, where Steve Jobs famously founded it (with that other guy) and then left for a professional manager who ran the company nearly into the ground, and then returned to restore Apple to levels of greatness never imagined, but now some guy named Tim Cook is running the show even though nobody really knows who he is or where he came from. So it is not true that making it to the C-suite depends entirely upon birth. Merit still exists. It is possible, however remotely you think it to be the case, that Galen has merit as well as money.

Or we could look at our leader Mr. Trudeau. Did he have merit, or did he have a name based on a “birth lottery”? Of the 36 million people in Canada how did the son of a former prime minister get the job? Well I suppose the Bush family pulled it off in a country 10 times the size but you see my point. As the saying goes, “You have to be good to be lucky and lucky to be good”.

#22 espressobob on 12.25.20 at 7:21 pm

Investing is a bloodsport plain and simple. Stripping the flesh off your bones is the pure nature of what contrarians do.

Merry Xmas .

Hiring a pro is the only defense you have against a predator.

Wanna play?

#23 Trudeau’s Magic Money Machine on 12.25.20 at 7:23 pm

You just wait and see the one, two, and three year total returns from now on Canadian oil stocks, gonna be huge.

There’s still time to get yourself an oily Christmas present.

#24 AntMan on 12.25.20 at 7:31 pm

#1 Dogman01 on 12.25.20 at 3:44 pm

Shirtsleeves to shirtsleeves in three generations. There are plenty of studies out there that show intergenerational wealth transfer has little chance of surviving past the third generation and good reasons why it is so. Some studies show that only about 10% can beat the third gen curse. Here’s one https://boyd-wealth.com/blog/shirtsleeves-to-shirtsleeves . It seems to challenge the notion of entrenched aristocracy.

#25 JacqueShellacque on 12.25.20 at 7:36 pm

You’re ignoring the time dimension, Doug. Caution isn’t the same as market timing. Depending on the age and life circumstances of these clients, they may not be able to afford a 20 or 30% drawdown, whose impact will be felt for the duration of the life of their portfolio. There’s a big difference between 7 or 8% per year over a given period as computed on a compound interest calculator vs 7 or 8% per year over the same period but with a massive up-front drawdown.

#26 Be Brave But Don't Be Stupid on 12.25.20 at 8:08 pm

https://www.wsj.com/articles/covid-19-caused-chaos-for-investors-in-2020-these-hedge-funds-earned-billions-11608892202?mod=e2fb&fbclid=IwAR1cn8qeRAg-6wARrc_6J7Zcga8GkR6iIDTeDKoMBtsnEJWiYm6eXLcov3k

#27 Garth's Son Drake on 12.25.20 at 8:19 pm

So, basically what you are saying is that the markets love stimulus, which is inevitable when employment tanks.

Me thinks so too.

March 31, 2021 – the stimulus cliff. See who blinks first.

#28 Jake on 12.25.20 at 8:30 pm

#3 KNOW IT ALL on 12.25.20 at 4:15 pm
JIM Cramer

“There’s ALWAYS a bull market somewhere and I’ve spotted one here”

Cramer likes to throw up charts that are always heading to the moon and makes you feel like you’re missing out. Yet, he has his share of misses.

2018 he was beating the table on Constellation’s 4 billion dollar deal with Canopy, the latter which is now down 50%. Missed also on Boeing and last year’s IPO of LYFT which he said will be a slam dunk winner. He also criticized Musk and called Tesla a cult stock until of course it started to fly. Same too of Shopify, where recently he said it’s too high, now he’s in love with it.

#29 espressobob on 12.25.20 at 8:31 pm

Upside in commodity plays require entry and exit points to actualize profit. This course of action generally underperforms the major indices

Funny how many will never understand this…

#30 Buford Wilson on 12.25.20 at 8:51 pm

Now I feel like not investing until there’s a sharp decline in the markets.

#31 Doug Rowat on 12.25.20 at 9:06 pm

#25 JacqueShellacque on 12.25.20 at 7:36 pm

You’re ignoring the time dimension, Doug. Caution isn’t the same as market timing. Depending on the age and life circumstances of these clients, they may not be able to afford a 20 or 30% drawdown, whose impact will be felt for the duration of the life of their portfolio.

—-

A 30% drawdown with a balanced portfolio?

However, their personal circumstances have no relevance. Consider them the median Canadian family in every way if that helps.

Their email clearly indicates that they had a particular view of markets and weren’t considering hedging their bets in any way. That is the error.

—Doug

#32 Doug Rowat on 12.25.20 at 9:15 pm

#10 Joe on 12.25.20 at 4:57 pm

I think the fear is justified this time.

—-

I bet you said that in March too.

—Doug

#33 604Sam on 12.25.20 at 9:23 pm

TLDR: be greedy when others are fearful.

Merry Christmas all!!!

#34 Russ on 12.25.20 at 9:55 pm

Meery Christmas to all.

On side of contrarians and “it is not really different this time” let us compare two Christmas messages from the Queen.

The first one to be televised in 1957 and the most recent.

The similarities are remarkable.

Christmas 2020
https://www.bbc.com/news/uk-55447011

Christmas 1957
https://www.youtube.com/watch?v=mBRP-o6Q85s

Cheers, R

#35 Leo Trollstoy on 12.25.20 at 11:00 pm

Most people fight to remain poor

It’s called the 1% for a reason

#36 David Hawke on 12.26.20 at 7:29 am

TurnerNation nailed it again!

#37 COW MAN on 12.26.20 at 9:17 am

It would be great to broaden the day decrease and the one year return charts, by adding a column of the amount of Government deficit added, in the subsequent year. How much debt did the tax payer incur to generate the stock market returns over that year?

How much did the terribly managed roll out of CERB and CRB in-debt us all, while supporting the stock market? Does the support for those who need it actually end up benefiting those who don’t need it even more?

#38 Moses71 on 12.26.20 at 9:27 am

Awesome blog.
And the waiting by the sidelines male chicken may still be hiding his head in shame now and letting you think he’s still sidelining it. Chicken turned ostrich

#39 Habitt on 12.26.20 at 9:31 am

Thank you Doug for the dose of reality. Best wishes to you and your family. Keep up the great work.

#40 GoodLuckCharlie on 12.26.20 at 9:35 am

The stock market does not represent the economy. It does not reflect financial health or the stability on main street. The stock market is an artificially propped up Pavlovian bell designed to make the public salivate every time the tickers go green.

The post was about investing in a balanced portfolio, not buying individual stocks. But thanks for that moment of wussiness and confusion. – Garth

#41 Moses71 on 12.26.20 at 9:36 am

And tell the chicken with the male parts turned ostrich you have some great GICs you want to sell him so his cash position doesn’t lose him as much against inflation bahaha

#42 SunShowers on 12.26.20 at 10:01 am

“Investment journalist and author Ben Carlson notes that the best returns come when “the economy is getting body slammed” and he illustrates this point via the table below, which compares the US unemployment rate and market returns”

Hmm, seems like we have an economic system where the livelihood of the rich is diametrically opposed to and has an inverse correlation with the livelihood of the working class and poor.

People with invested retirement savings plans are not ‘the rich.’ – Garth

#43 Humble Servant on 12.26.20 at 10:06 am

This article clearly demonstrates your ongoing arrogance and the arrogance widely held by most financial advisors in the industry. People make mistakes, its not fear as you state… it was sensible thinking.

There was an equal chance by July that the market could have double dipped and would have remained down, even providing a good re-entry point.

You’ve demonstrated little understanding of their situation and used it to highlight your point of “always stay invested in the market” and if you want to beat the market invest in me cause I’m so much smarter then these people cause was soooo right this time!

Staying on the sidelines through this crisis was a clear financial mistake, I know I made the same mistake. But it was NOT because of fear, it was because of market valuations. This market was fairly valued in July, then it got overvalued, then it got crazy valued and now it’s got lost your mind overvalued.

As a value investor I just can’t get back in this general market. Stop belittling people who made a rational decision that ended being incorrect. It happens!

And stop diminishing prudent advisors who made the right call. – Garth

#44 crowdedelevatorfartz on 12.26.20 at 10:21 am

Geez.
Working 0N Christmas day?
Alastair Sim would be proud.

Interesting graph on Unemployment rates and Market performance.

#45 Bankish on 12.26.20 at 10:22 am

I am 100% invested all the time in dividend stocks and over time it has paid off well for this retired no pension senior.
A few months ago I bought shares in Smart Centres REIT, Pembina Pipeline and Enbridge Inc. that were paying a 8.5% dividend by selling all my National Bank and a little bit of my Royal Bank shares that were paying less than 4.5%.
It’s not perfect, but the risk seems worth it to basically double the income of that portion of money. I’m keeping all my new individual investments to 5% of my portfolio and will slowly try to own 20 dividend stocks in the far future, up from the 9 I now own (85% Canadian Banks).
Stay invested it pays off in DIVIDENDS!

#46 Dharma Bum on 12.26.20 at 11:00 am

An oldie but a goodie:

“So, first of all, let me assert my firm belief that the only thing we have to fear is…fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” – FDR

https://www.youtube.com/watch?v=QISyG92Wwjk

Stay invested, my friends.

#47 Camille on 12.26.20 at 11:15 am

Thank you for the post Doug. I agree that markets will probably be higher in a year so I will not take you up on that bet.
Would you take on the bet that interest rates will be higher in a year? I truly don’t know.
Interestingly though (follow me here for a short moment), Nouriel Roubini calls Bitcoin “shitcoin” and says Central Banks will create digital currencies which will allow individuals to essentially draw on CB like commercial banks, and making “negative rates” effective. You see how they’re thinking, how is that policy?

#48 Phil on 12.26.20 at 11:30 am

#5 TurnerNation on 12.25.20 at 4:24 pm

The holidays: this glorious season Kanadians have the options of ratting out their neighbors and friends via dedicated snitch line, online form submission or even 911 – if the CV crime is of severity.
All these calls will ensure our First Responders are worked to the max during their shifts. Such that when serious calls arrive, they may already be exhausted, no time for lunch, or mis-postitioned around the city.
Let’s work those First Responders to the bone!

Well done guys. :(
——————————————————
I agree Mr. Nation;
Those “Canadians” are not :
good citizens, informers,tattletales, finks,whistle-blowers, stool pigeons,squealers, snitches…
They are rats, Big fat RATS!

#49 Steerage mystery on 12.26.20 at 12:09 pm

Why do people pay you 1% and then not take your advice! Ouch.
Just stay invested til the end of time……

#50 it happens on 12.26.20 at 12:10 pm

A 30% drawdown with a balanced portfolio? -Doug

How much were you down during the 2008 drop??

In the credit crisis the stock market lost 55% and took seven years to restore. The balanced portfolio dipped 20% and was restored in one year. People who ignored their portfolios between 2008 and 2010 made an average of 5% annually. Those who got scared and went to cash during the mess suffered the consequences. – Garth

#51 C V on 12.26.20 at 12:28 pm

People are driven to cash through fear of COVID headlines, but they should be driven to invest by fear of the headlines that should speak of a 10-15% currency devaluation. Sadly those headlines don’t exist

#52 Dogman01 on 12.26.20 at 12:55 pm

#21 Nonplused on 12.25.20 at 6:52 pm
#24 AntMan on 12.25.20 at 7:31 pm

Regarding Galen, I confess ignorance of his character.
– Bill Gates seems to be doing it right, 90 % to good works, 10% to keeping his offspring in good graces. Microsoft did not becomes the Gates family “estate”. – and is better for that.
– Elon Musk – his use of wealth is inspirational, SpaceX is aspirational – Elon is a comic book hero.
Galen has the upbringing, the schooling, and maybe he is the best. I would bet he is near the edge of the Bell curve for success traits, But in the rarefied air of the “C” suite I imagine there are some guys whom might be better whom have worked for the Corp for a long time, but are not the Son.

Compare Trudeau II and Ben Mulroney? Trudeau could directly leverage his fathers legacy\name to excel in Politics. Ben Mulroney was able to succeed in a field where his father’s success provided not so much leverage. Trudeau has more power but Ben …..he did it his way.

I am surprised at the 90% Number in AntMan link, The Oxfam\Forbes study shows Inheritance as the cause of 33% of North American Billionaires.

That French economist Piketty described the problem, a future where inherited massive wealth metastasizes. And he did propose some solutions ; https://thetyee.ca/Culture/2020/04/21/Thomas-Piketty-Inequality-Economist-Solution/

It’s the “unearned”, unmerited power this wealth confers (not the fancy houses\cars and bling) That concerns me.
“In Democracy it’s your vote that counts, in Feudalism its your Count that votes”

This is interesting also: https://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014

#53 Alberta Ed on 12.26.20 at 1:00 pm

Stay balanced and diversified, and don’t worry overmuch about the future. Time, good health and your loved ones are the most precious gifts you have.

#54 TurnerNation on 12.26.20 at 1:03 pm

Airline industry/travel rights.
This is what it is all about. Control over our movements/insane new Green Deal/#stayhome.

It’s a bad movie script at this time. Shut down all First world countries. But wait…a MUTANT mutation is on the loose. Panic! Take away more rights. Are they trying to force a UBI? Why I never…

They’re called HEADLines for a reason, to get into your head. We are in the Normalcy phase of this global rollout. Past the Compliance phase (all those stories of people being attacked or even shot (Minden, ON) over non-compliance really trained us. Woof.)

“New York City orders international visitors to quarantine

U.S. Will Require a Negative Coronavirus Test for All Travelers From U.K.

Hong Kong extends Covid-19 quarantine for visitors to 21 daysNews Links”

#55 Prince Polo on 12.26.20 at 1:42 pm

#43 Humble Servant on 12.26.20 at 10:06 am
This article clearly demonstrates your ongoing arrogance and the arrogance widely held by most financial advisors in the industry. People make mistakes, its not fear as you state… it was sensible thinking.

There was an equal chance by July that the market could have double dipped and would have remained down, even providing a good re-entry point.

You’ve demonstrated little understanding of their situation and used it to highlight your point of “always stay invested in the market” and if you want to beat the market invest in me cause I’m so much smarter then these people cause was soooo right this time!

Staying on the sidelines through this crisis was a clear financial mistake, I know I made the same mistake. But it was NOT because of fear, it was because of market valuations. This market was fairly valued in July, then it got overvalued, then it got crazy valued and now it’s got lost your mind overvalued.

As a value investor I just can’t get back in this general market. Stop belittling people who made a rational decision that ended being incorrect. It happens!

And stop diminishing prudent advisors who made the right call. – Garth

================================
There is nothing rational/prudent about being in all cash bro/sis. Instead of lamenting about a missed opportunity, go for a 60/40! While you incorrectly lambaste Garth&Co about arrogance, you ironically make the assumption that you know the market will tank; once it does, I’m sure you will come here to gloat about how Einsteinian you are. Meanwhile, people who are fully- and properly-invested will go on with their lives.

‘Arrogant’? How can I be arrogant when I’m always right? – Garth

#56 SunShowers on 12.26.20 at 2:10 pm

“People with invested retirement savings plans are not ‘the rich.’ – Garth”

Joe Blow isn’t going to care that the 100 grand (on average) in his RRSP appreciated 10% this year if he just lost his job. These two things aren’t equal, and asset appreciation doesn’t even come close to offsetting a job loss for the overwhelming majority of people.

People with enough exposure to the stock market for gains to offset a bad economy are heavily concentrated at the top of the wealth ladder. The top 20% of Canadians own over 2/3rd of Canada’s household wealth, while the bottom 40% own only 2.3% (the bottom 20% have negative net worth.)

You might want to take the SJW moaning to a blog that cares. This one is about helping people achieve. – Garth

#57 Prince Polo on 12.26.20 at 2:39 pm

#55 Prince Polo on 12.26.20 at 1:42 pm
#43 Humble Servant on 12.26.20 at 10:06 am
[Prince Polo blah blah blahs]

‘Arrogant’? How can I be arrogant when I’m always right? – Garth
================================
I obviously need to work on my prose skills. I was implying Humble Servant was arrogant. Garth, on the other hand, is mostly divine-adjacent. Thank you for allowing us pitiful peons, a voice on your omnipotent blog. How much more grovelling is required to get out of the penalty box?

Sufficient. But watch it. – Garth

#58 Stone on 12.26.20 at 2:39 pm

#56 SunShowers on 12.26.20 at 2:10 pm

People with enough exposure to the stock market for gains to offset a bad economy are heavily concentrated at the top of the wealth ladder. The top 20% of Canadians own over 2/3rd of Canada’s household wealth, while the bottom 40% own only 2.3% (the bottom 20% have negative net worth.)

———

So, what you’re saying is that we should reward that bottom 40% for being stupid? It’s really not that hard to crawl out from that group…if they actually tried.

I grew up in that group. Now, I belong in the 1% club. How did I do it? I tried.

#59 Dr V as Clint Eastwood on 12.26.20 at 4:25 pm

56 Sunshine

“The top 20% of Canadians own over 2/3rd of Canada’s household wealth, while the bottom 40% own only 2.3% (the bottom 20% have negative net worth.)”

Well, I guess I’ve moved my way up through every quintile over my working life. Started at 30 with a wife and kid, a little student debt (ie negative net worth)
and after attaining two professional accreditations, paying into then running a business, saving and
investing (living below my means) and having 7
figures of investable assets ready to retire, what am I
supposed to do?

Well I guess you want it. Why not come and just take it?

Do ya feel lucky….punk?

#60 PetertheSeparatistfromCalgary on 12.27.20 at 4:32 pm

It goes back to buy low and sell high. Fear creates sell offs and puts stocks on sale. Optimism makes them expensive and creates opportunities to cash out if you need the money. Risk is minimized by buying after a selloff.

From Wikipedia:

“audentes Fortuna iuvat”

“”Fortune favours the bold”, “Fortune favours the brave” and “Fortune favours the strong” are common translations of a Latin proverb. “