Who would have thought?…that the market would do as well as it has…that it would be called a Bull Market by some…after all the bad and ugly news that has been passed around… but probably Warren Buffet and Charlie Munger of Berkshire Hathaway knew – the market never stays down.
It is good to remember that there is One Bull Market in Stocks and it began a long time ago; read Wikipedia about the Buttonwood Agreement of May, 1792 which founded the New York Stock Exchange. We talk about Bull and Bear Markets over the years but it is more wise to look at a graph of many years and note that the direction always ends “up”. One must learn to tolerate the steps backward that occur regularly also. There is one long term winner – the market goes up.
Which brings us to the worry of a recession and then the wonder and the worry of no recession. Why? It is a waste of our time. I was in the audience one day long ago when John Templeton was talking and his response to a question was “If I knew that I would be wealthy.” But we knew he was wealthy anyway.
Expecting difficulty should be normal. Recessions will occur and they have a cleansing effect. The good corporations continue working, thinking, doing, and improving because of those problems. They don’t quit and a recession may be a “best time” to buy their stock. Problems and anxiety are not reasons to stay out of the stock market. An in-depth look at the company and how it is handling its problems is why we buy certain mutual funds and concentrate on the managers and how long and how well they have been making money for us. It is important to remember that recessions are normal and will occur. Remove the idea that one could and should jump in and out of the market to avoid a recession.
When the market “takes a breather” or goes through a recession, we are inundated with ideas of “alternative” investments. The suggestion is that you need not go through tough times; these alternatives will make it all better. I don’t think so; every one we looked at or studied in the past did not earn you a good return or save you grief. We see these products proliferate during market recessions or expected recessions implying they make your life problem free. It’s good to remember that market problems are the investor’s opportunity and there are no magic answers to problems.
One last thing: debt. Have you heard that the root word of debt is death? I read that years ago. We recommend using debt cautiously to purchase items. Strangely, the world keeps believing that debt investments are safe while the stock market is risky. It is the opposite. When you have loans, someone or something has power over you and when you purchase them as “safe” investments, you have limited your return. You will never have the fun of being amazed that your investments have continued to grow and be amazed that you have as much money as you have today.
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We are thankful for your ongoing support, and we are always eager to help.
Louise Googins, President, Investment Advisor
Kim Rankin, Accountant
Richard Martin, Investment Advisor
Lynne Goldsmith, Investment Advisor
Dayton Hoffmann, Associate