April 7

Standing Up to the Bears – How to Respond When the Markets are Volatile.



Good afternoon everybody.  I wanted to send this quick video to you because I want to encourage you about what is going on in the market.  I have heard a few comments, and I have seen a few things online, and I am wondering how you are feeling about the market.  If you are a little discouraged, or if you are a bit scared and you are not sure what is going on, well, that is a pretty big crowd right now.  So you shouldn’t feel all alone; you should feel like you have plenty of company.  Really, I am trying to help you understand that we have been through this before.  The market has been through this before.  

There have been all kinds of events that have occurred throughout the market, let’s just say since 1899.  We have had all kinds of different things.  We had the Spanish Flu in 1918,  World War I, the Great Depression, World War II, the threat of nuclear warfare in the ‘50s and ‘60s, the Vietnam War in the ‘60s and early ‘70s, and the 1968 flareups of race division.  We have had all these different things that have caused the market to go up and down severely, and yet we have survived to this point.  There is no reason to suspect that we are not going to survive this.  Even though this is a very traumatic event, an event that has everybody wonder what is happening next.  

Here is what we have to realize:  We are not flying the plane.  We are passengers on this plane.  There is no sense that you and I get up out of our seat and go pound on the door and insist to the pilot that we are going to take over and we are going to start flying it.  Because we are not able.  That is not what we are able to do.  So we better sit tight, we better strap on our seat belt and just understand that this is going to be a rocky ride for a while.  Let’s trust the people who are flying the plane, because the people flying the plane are the ones most qualified to do it.  I want you to have this image in your mind as we go through this.

"When the market experiences its worst days, often it experiences its best day very close to that worst day."

I want to show you exactly what I am talking about when I say that we have been through this before.  I want to go back all the way to July 9, 2007.  I remember I was doing a seminar for the U.S. Marshals in Atlanta that day.  People were coming up to me saying “did you know that the market hit this new high?  It is almost 1500!”  And they were so excited.  One guy told me “now I am going to be able to retire next year!”  Everyone was thinking that this was the top of the top, it has never been better, and it is always going to be that way.  Well then, on October 8, 2007, we hit another high, and it was the high of the highs again!  It was just going up, up, up.  

This is a lot like we were experiencing in the last 6 months through the market when we hit high after high after high, and we broke 30,000. The same thing was going on in 2007, and people were thinking “this is going to be great!  This is going to be forever”.  And then what happened?  From that point on, the market started going down.  We had all these types of financial events that were happening.  People not paying their mortgages, people not being sure what type things were being sold in the market, whether what they held was any good, and they began to question everything.  So the market started going down.

When we get into 2008, we hit this low as of January 14, 2008, where the market has lost a significant amount of money or a significant amount of position, and everyone is wondering “is this going to be okay?”  People are hanging in there, and then all of a sudden throughout 2008, we see things happening.  The President goes out and he talks about the financial economic state, and people get scared.  Starting somewhere in September 2008, things go down precipitously.  On the 15th of September, 2008, we are at 1099 in the S&P 500, and then a couple of days later we are at 876.  So, we lost somewhere around 15-18% in a very short period of time.  Then the market suddenly spikes back up, and people feel good.  That was on October 27, 2008.  

So, from October 6 to October 27, we have a low, we have another low, then we have an up.  Everyone is excited.  By the time we get to November 17, it is even lower.  It is as low as it has been for a long, long time.

Then when we get to March, 2009, we hit our lowest point yet, and everyone is thinking “the market it over.  It’s never going to be the same.  I am never going to get in”.  That was actually the lowest point we hit in that recession from October 2007 to March 2009.  

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From March 2, 2009, the only way we went was up. Now, we had a few blips along the way, but the only way we went was up, in a general trajectory.  We grew more than 400%, almost 500% from that time forward.  We went from somewhere around 768, and by the time we got to 2020, our high for the S&P 500 was somewhere around 3,370.  We went from a really low time in March 2009 to a really high time in 2020.  Of course, since that time, we have had a lot of ups and downs.  We see that from February 18-19, the market all of a sudden was down tremendously by February 28th.  Then it went up the next couple of days, and everyone was excited.  Then it went down on March 9th.  We went down precipitously again.  Everyone was thinking “okay, it must be over”.

When things happen in this fashion, when the market experiences its worst days, often it experiences its best day very close to that worst day.  This happened in 2007, in 2008, in 2009, it has happened throughout the history of the market, and it is happening now.  There is no reason to think that the market cannot recover.  The companies that we invest in make good products, generally speaking.  They have the ability to pay their employees, generally speaking.  They have a market not only in the U.S., but also have a market globally, generally speaking.  There is no reason to expect that our positions won’t go back up over time.  How fast that is, how long it takes for us to recover, we don’t know.  But it could be a long while.  It could be 3 years, 4 years, 5 years.  Who knows?

But we do know this.  There is no better place to have your money grow than in the investment market.  And if there is no better place, where else are you going to put it? Any other place you would put it is in a position that will miss the growth of the market that is sure to come in the future.

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