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.

What Annoys Jeff this Week?

1. A plastic bag. There’s a white plastic bag in the top branch of one of the trees in my front yard. It makes me unreasonably angry. Mostly because even with a ladder I don’t have any implements long enough to haul it down. So, I’ll have this damned plastic bag stuck in front of the house forever or until I cut the tree down, I guess. Just another reason why I hate people. This bag belonged to someone but because they are an irresponsible asshat, now I get to look at it indefinitely out the front window.

2. The days of the week. The only real trouble I’ve had in this long stretch of working from home, is that the days have a real tendency to bleed together. Monday is a lot like Thursday which is a lot like Saturday and on, and on, and on. Hey, I’m a creature of habit, I’m not really complaining… but it does lead to a lot of minor moments of crises that start off with “Oh shit, that was supposed to do that today.”

3. r/wallstreetbets. The Redditors of r/wallstreetbets were mad geniuses last week, executing a classic short squeeze and costing at least one hedge fund a couple of billion dollars. Everyone likes it when the scrappy upstart scores one against the big guys. I get it. The fun part was once things started happening the broader world thought, inexplicably, that everyone could ride GameStop shares to the moon. Now there are posts awash with disbelief that people have the audacity to sell shares and take some profit. Maybe the folks over on Reddit play by different rules, but expecting anyone to ride a stock as wildly overvalued as GameStop had become and then hold it there at its highs indefinitely as the knife started falling back to earth, feels like exactly the kind of wackiness I’ve come to expect from message board people.