Be a Gangster Baby: Invest Without Fear
Last week, I had the unfortunate role of taking our youngest child (Molly) to get her immunization shots prior to starting kindergarten next year. If you are a parent, you know that this is one of the worst doctor’s appointments, because the kids are usually old enough to understand what’s going on. And, while you don’t want to answer their question of ‘am I going to have to get shots?’ with a lie, you also don’t want them dwelling on the idea and/or panicking.
Fortunately for me, Molly barely even flinched at the shots. The nurses were amazed, and I kept waiting for a delayed sobbing fit that never came. I shouldn’t have been too surprised, as Molly is notoriously tough (and stubborn!). She wants to be just like her older sister, and so of course asked to get her ears pierced about a year ago. This was a very traumatic event for her sister, so we were all a bit concerned about how it would go. Once again, Molly amazed with her toughness. She didn’t even shed a tear, and afterward, the woman who did the piercing exclaimed to my wife, “That’s a gangster baby!”
Fear and volatility are once more rearing their ugly heads in the markets with the again-escalating trade wars with China. As I write this, markets are experiencing a modest recovery from yesterday’s 2.41% drop in the S&P 500 and similar losses in other sectors. While the S&P is down 4.5% since May 3rd, the index is still up over 12% for the year. I think we can all be fairly happy with that rate of return.
As we have said before and will repeat again and again, trying to predict short-term market direction is a fool’s errand. And, even if you happen to be right with your “timing,” it might not make that much of a difference for your long-term results. Consider the graphic below from www.visualcapitalist.com:
Once again, investors are most rewarded by time in the market vs. trying to time the market. We are still in the midst of the longest bull market in modern history (fingers crossed!), but we have experienced eight corrections (declines greater than 10% but less than 20%) during that period (since 2009). If you had “gotten out” during any of those periods, you would have missed a significant amount of return. The most recent was at the end of last year where the global markets declined over 18%.
The bottom line is that I think the “trade wars” will work themselves out in some way. Exactly how, I have no way to know, but the two countries’ economies are so closely tied that it’s in their best interests to reach some sort of compromise.
So, be a Gangster Baby like Molly, and don’t let short term pain derail your long term goals!