A Siren Song? The Sirens are mythical creatures with hypnotic voices in the story of the Odyssey. They caused the sailors fear and then danger. Siren songs have not gone away. Fear is the hypnotic song and you can hear it all day long and in most messages. I have asked people who have been successful in various ways if they were encouraged by others to get started; for the most part they were not. Why is it considered wise to warn people of the dangers but not encourage them of the possibilities?
So, today, we hear ever-circulating fears. The market is/was too high, inflation is driving costs up, gas prices have risen dramatically, interest rates are rising, Marxist Ideas proliferating, the market is falling, you need safety and who trusts the politicians? But safety is an illusion, another Siren Song. All the listed worries, and many more, are true at various times. What is also true is that each of those items has been overcome more than once in the past years by people and markets. And, these are the good times to buy!
Always remember, we buy companies, we do not buy stocks. The stock is a way of summarizing hours and hours of research that culminates in a decision to buy or not buy the company.
This leads me to the March Quarterly Report of the Baron Funds. I have found it excellent reading – 4 times a year. Ron Baron and Linda Thompson each write letters chock full of information – good information. Ron’s report usually talks about people whose stock the funds have purchased after intensive study and then continue to know and respect the people who run the companies.
This quarter Ron talked about 3 stocks they did not buy – also after spending significant time and money studying the stock representing the company they did not buy. One is Theranos, developed by Elizabeth Holmes, but recently convicted of fraud; two, movie producer, Harvey Weinstein, now in prison for sex crimes; three, Ponzi schemer Bernie Madoff who died in prison for fraud. All of those people and the companies they represented were studied heavily by the Baron funds before Baron decided they would not buy the stock.
Back to my message of expecting the stock market to take care of you as you age. Do not think that anything new is happening. There have always been problems and solving problems is why the owners of many corporations have been able to provide us with good returns. I was reminded of how terrible inflation and the 1970’s had been after I had entered the market as a hopeful investment advisor/financial planner in 1978. However, changing policies helped the market and the economy and the 1980’s and 1990’s were explosively good. But the 2000’s with many terrible events have also made money for people who trained themselves to ignore the Sirens and hold their course.
I will finish with a message from “legendary stock picker Peter Lynch.” Remember him? He ran Fidelity’s Magellan Fund for 13 years and gave these points in a speech back in 1994, (1) “Some event will come out of left field and the market will go down or the market will go up. Volatility will occur.” (2) “I’m pretty convinced the next 3,800 points will be up; it won’t be down. The next 500 points, the next 600 points – I don’t know which way they’ll go.” (3) “Profits go up 8% a year, and stocks will follow. That’s all there is to it.” And, yes, it continues to work that way – even as we look at the market in June, 2022.
We offer you a Siren Song also; You are in carefully run funds but nothing goes straight up – that would be too easy. Hang on, and you will be rewarded. There are no guarantees, just hard work.
Sincerely yours,
Louise Googins, President, Investment Advisor
Michael Googins, Administrator
Kim Rankin, Accountant
Richard Martin, Investment Advisor
Lynne Goldsmith, Investment Advisor
Kyra Meach, UW-Madison Intern
Dayton Hoffmann, UW-Madison Intern
Alex Kahlenberg, UW-Madison Intern