Buy and hodl, buy and hodl…

For a stretch there from April 2020 until January of this year, any schmuck with an E-Trade account could make money in the stock market. It was very easy for people to get the impression that they were an investing genius thanks to what was probably the hottest market in my lifetime carrying the freight. Since January, though, there seems to be a whole lot of people who are confounded that the market can move down as well as up. 

I’ve got my own records going back to 2003. Looking at the charts, I can see clearly at least three other “big” down periods – 2008, 2015, and early 2020. The rest is slow, steady, upwards progress. Something about time in the market versus timing the market, I suppose. Looking at my May report, I can see I’m down a little more than 12% year to date. Sure, I’d be happier if it were 12% up for the year so far, but nothing I’m seeing feels like cause for panic. Pulling the charts back to look at the 5-, 10-, or 20-year trends tells me the important part of the tale.

Before long, I expect we’ll increasingly see stories about people bailing out – “fleeing to safety” – in some alternative investment. From where I’m sitting, panic decisions are just about the worst thing anyone could do to themselves. Over a long enough horizon, despite every historic crash, dip, and period of stagnation, U.S. markets have never gone down and stayed down. Past performance is no guarantee of future results, of course, so maybe “this time it really is different.” I doubt it. 

So, yeah, I’m 12% down. From where I’m sitting, it’s mostly a shrug and a so what. With at least 13 years to run before I could need a nickel of those funds, why wouldn’t I want to buy today at a solid discount to what I was spending on January 1st? If I were planning to retire on May 31st 2022 instead of 2035, I’d probably be more worried. If I had pulled the trigger and gone off into retirement at the beginning of the year, I’d probably be horrified at what it means for my sequence of returns… but I also wouldn’t have started that adventure all in on index funds instead of shepherding my lot into dividend payers, bonds, and allocations designed to preserve capital rather than chase growth.

The wider universe is going to do whatever it’s going to do. Our politics will swing between the extremes. Climate will continue to shift. There will be great breakthroughs and horrendous failures. Through it all, I’ll be over here quietly buying a little every week, planning for the best case and not-so-best-case future, and doing my level best to make Fortress Jeff my own haven in a turbulent world. As far as I’m concerned, reports of the end of history and impending financial doomsday have been greatly exaggerated. Through it all, there’s very little new under the sun.

Attention citizens…

Attention Citizens of Maryland,

We live slightly to the south of the 39°43′ N parallel marked by Charles Mason and Jeremiah Dixon in 1767. Due to our geographic position in the northern hemisphere, we can, from time to time, expect that frozen precipitation will fall out of the sky and in accordance with the basic laws of physics, come to rest upon the ground. When it occurs in quantity, this natural phenomenon is colloquially know as a “snow storm.” Like its warmer, wetter cousin the “rain storm,” this is a perfectly natural event and tends to occur regularly during the months of December, January, February, and even March.

These storms, particularly the ones that take place late in the season tend largely to be quick hitters – lasting for a day or two at most before melting off because the ambient air temperature is well above freezing. Now I’m not a fancy, big city weather forecaster, but it strikes me that calling for wall-to-wall news coverage of a rainy day seems silly. I’m not sure why doing the same thing for snow is really any different… and yet, somehow, it is obviously considered a completely different animal.

So, my fellow citizens, here’s the thing: If you’re panicking right now, running to the supermarket to stock up on six metric tons of toilet paper, or driving across the state for a snow blower, you’re a moron. Every time there’s snow in the offing, the news gins up video of people lined up buying shovels, ice scrapers, and salt from their local big box store. In my mind, that only begs the question: Who are all these people who up until now have had no need for a shovel or a scraper? I’ve had the same “snow preparedness kit” since I moved into my first “grown up” apartment. Same shovel. Same scraper. No salt (because it’s mostly just a pain in the ass that ends up with more in the house than on the driveway). Is it really possible that so many people have never before had the need for a snow shovel or the means of clearing ice off their windshields. I’m just saying. It’s not like these are items that are consumed in use or their technology is getting better every year, so the one you bought for the last storm will work just fine for this one.

Maybe I’ve missed the point. I suppose if one shovel is good, having three or four must be better. And certainly every vehicle on the road needs half a dozen ice scrapers. I guess I’ve just never caught the bug for panic buying. You’ll eventually use all 300 rolls of Charmin, but running out and picking them up because it’s going to snow is an activity that’s simply lost on me. Still, we’re a mostly free people, so go forth and hoard if that’s what you think needs done in the face of nature’s “wrath.” I’ll be here with my feet up judging you and mocking your all too predictable asshattery.

Kind regards,

Jeff

Feel the power…

ABC News ran a feature tonight about the “greedy” power companies who were turning off the utilities of people who were not paying their bills. Of course they trotted out the usual suspects… The family of 6, the old woman raising her grandchild, etc. All they said of the companies was that they were stopping service because delinquencies drive up the price for paying customers. Yes, Mr and Mrs Dontpaymybills and all the ships at sea, that’s how it works in this country. We trade goods and services for money or the promise of money at some predetermined point in the future. That’s what allows us to not all raise corn and cows to feed ourselves.

I know I rant on this a lot, but I just have a hard time getting past the idea that our countrymen are surprised that they’re expected to pay for the goods and services they consume. I was raised believing that this country was about the right to pursue happiness… Not necessarily the right to have it. In economics, there’s a principle that everyone learns in their 101 class that says “there’s no such thing as a free lunch.” The consequences of basing an economic system on the premise that everyone should have a free lunch if they want one died off with the Soviet Union. Cuba stays afloat because of the tourist dollars generated from capitalist Europe. China’s Communist party stays in power because they have adopted measured amounts of capitalism and that trend is increasing over time.

But, you say the top 1% of earners are running away with the pie. It’s true that their part of the pie has grown, but the entire pie has gotten larger too. There are more millionaires per capita today than at any time in the history of the Republic. That doesn’t mean that these individuals have jobs making $700,000 a year, just that they were smart with what they did with their money. Get out of school making $35k a year, max out your contribution to your IRA and 401k, live under your means, and in 35 years when you’re eligible to retire, guess what… You’re a millionaire too. Work another 5 or 6 years past eligibility, guess what… That’s right, another million. Compound interest and long-term market growth are beautiful things, friends.

So next time you’re watching the nightly news and tempted to sign onto the bandwagon that all our problems are caused by the big, bad corporations, take a look around at the decisions individuals have made that contribute to where they find themselves. The Invisible hand doesn’t just guide the market up, it guides it down too. Get in tune with that and you’ll really feel the power.