Not everything went as planned, but we were very blessed on our 2024 family camping trip.
We safely travelled 6,639 miles through 13 states. We had a few long boring days in the car to reach our destinations, but they were more than offset by adventures, amazing views, and exciting experiences along the way.
On the positive side, our most memorable moments include hiking up and into a dormant volcano at Lassen Volcanic National Park, ziplining in Utah, swimming in the cold Pacific Ocean, sunsets on the Oregon coast, hiking among the redwoods, seeing 11 bears during our first day in Yellowstone, getting absolutely soaked by Bee Hive Geyser, walking in a river of Mormon crickets, being in the middle of a bison herd (in our car), and feeding the burros at Custer State Park in South Dakota. Great memories!
Despite all of these good times, instinctual human memory seems to emphasize what went wrong. Bad news always seems to be stickier for some reason. On our trip, these prominent memories include a sprained ankle from jumping off a fallen redwood tree, a rock hitting our windshield, a disappointing campground where both the laundry and pool were closed, being forced to bypass Crater Lake National Park because the campground was still under snow, and waiting 2.5 hot, hungry, thirsty hours for a geyser that was not running on schedule.
Investors go through the same memory cycle of highs and lows. Remember those positive years in the financial markets in 2010, 2012, 2013, 2014, 2016, 2017, 2019, 2021, and 2023? They are probably a nonsensical blur because they don’t really stand out.
More likely to stand out in our memories are years like 2022 when almost everything temporarily lost value, the unprecedented COVID plunge of 2020, or the Christmas Eve debacle in 2018. Those are burned in our memories.
In aggregate, long-term investors see more up years than down years throughout their lifetimes. While history is not a guide to the future, the stock market has provided positive returns during roughly 70% of calendar years. This knowledge is of minimal comfort when short-term traders switch from greed mode to fear mode and we see our account values temporarily decline.
Some people attempt to minimize those downdrafts by timing the market – jumping in and out based on their emotions (or emotions rationalized by current headlines). This may work some of the time, but the Market Timers Hall of Fame does not yet exist.
More rationally, our approach is to humbly accept that we cannot predict future market movements with any certainty and, furthermore, accept that a portion of our clients’ diversified portfolios will temporarily tumble at an unpredictable cadence. We then structure our clients’ portfolios to minimize the chances they will be forced to sell volatile investments when they are at temporarily reduced values, putting time on their side.
While nothing ever goes exactly as planned, having a plan in place for a vacation or market highs and lows provides a solid direction toward your destination. While we cannot predict or control the future, we can control how we react as it unfolds one day at a time.
Quote of the week
Joshua Brown: “The next time you hear someone say we’re overdue for a correction, ask them for a copy of the schedule. Unfortunately, markets are biological rather than mechanical in nature and, as such, precision in timing is nowhere to be found.”
