“Do not be disturbed by future things, for you will come to them, if it shall be necessary, having with you the same reason which you now use for present things.”
Marcus Aurelius, Meditations 7.8
Our memory does funny things to us. The current and the future are far scarier than our past. Mostly because the past is just that... The past. Meaning we have encountered it, beat it and moved on from it. The future is scary because it is unwritten and unknown.
I’m reminded of my experience in the military. I enlisted in the National Guard in 1999. My Father served as well as both of my grandfathers. 1999 was peaceful and I thought enlisting would be a great way to gain some experience and have the Army pay for most of my college. What I didn’t anticipate was September 11, 2001. Maybe I was naïve but until that day I like most Americans didn’t know who Osama Bin Laden was.
By March of 2003 I was being activated to deploy to IRAQ. This was not a part of my plan. I was in my senior year of college, about to get engaged to my now wife and start the rest of my life.
To put it frankly, I was freaked out. At the age of 23 I thought my world was being turned upside down. I wasn’t eating well, sleeping well and worrying about a ton of things outside of my control. One afternoon we were coming off the range and my platoon sergeant and friend pulled me aside and gave me some advice I’ll never forget. He was a Marine who had served in the Persian Gulf Conflict. He said, “You need to go ahead and come to terms with your own death. There is a chance you will not come home, and you need to be okay with that.” Basically, he was telling me to come to terms and understand as best as I could the worst-case scenario.
Looking back on that time now is not near as stressful. Why? Because I got past it. It’s a known quantity, a part of my past and more importantly a part of my story.
Jim O’Shaughnessy, Chairman and Chief Investment Officer of O’Shaughnessy Asset Management recently sent a series of tweets addressing how to approach the recent volatility.
“Right now, take a deep breath, sit down, and write about how you feel about what is happening in the market. Be freeform and be honest. If you feel a pit in your stomach, write about it. If you feel jittery, write about it. If you think this is the next financial crisis, write about it. If you feel like selling out and going to cash, note that too. Write about every worry, frustration and uncertainty you are currently experiencing. Then date it and put it away.
Chances are very good that when you read it again 12-18 months from now, you’ll be shocked you felt this way. Your brain will do somersaults to try to convince you that you “really” didn’t feel everything you wrote, because things will have calmed down. Corrections and bear markets are a feature, not a bug of the stock market. Without them, there would be no equity risk premium. Look back at EVERY OTHER market decline and remember, people were feeling like that was the end too. It wasn’t then, it isn’t now. This is a healthy, if painful in the short-term, action. Most important, remember, this too shall pass.”
He’s right. We can study Market and economic cycles and, in our mind, come to terms with how we should behave but there is nothing that can replace living through it and understanding your gut reaction.
Here’s what I propose. Take Jim’s advice and write down your feelings and reactions to the recent market cycle. Be honest with yourself and if you feel comfortable send it my way. If you are a member of the RIM Family this information is critical to how we proceed. If you are nervous, uncertain, wanting to make a change let me know. Just as important if you feel confident, unfazed or aren’t paying attention let me know that too. These feelings are just as important.
Have a great weekend and Take the Long View!