Normal
Normal is comfortable. Normal feels predictable. Normal is our safety zone.
And it is amazing how quickly normal can change.
A mere 3.5 months ago, my 18-year old son went off to college for his freshman year. My wife and I spent the next couple of months slowly going through his room to clean it, organize it, and detoxify it. I will not reveal the number of dirty dinner plates we located in his desk drawers. Let’s just say that cleanliness-challenged understates the astounding hygienic tendencies of a teenage boy.
A new, cleaner normal evolved in our household over these three months. We no longer found random yogurt containers scattered around the house. The number of spoons in our silverware drawer remained shockingly stable as fewer met their demise in the garbage can. The depth of clothing gently covering the carpet in his room reached record lows.
Obviously, we missed having him around, but he was just 45 minutes away, giving him the opportunity to wander home occasionally when the spirit moved him. However, he would stay for a few hours or maybe overnight and then head back to school. This was not really enough time to change our new, cleaner normal.
Just four days ago he finished up exams and came home for his six-week semester break. We are happy to have him home for a stretch. We also realized immediately that our new normal is no longer normal for the next six weeks.
The financial markets work the same way. Just two years ago the bears were cluttering up the markets and leaving messes all over the place. Pessimism ran high, headlines were dramatically negative, and worry was abundant. As they always do, they eventually decided to depart and we have enjoyed a relatively clean and peaceful time since then.
Our new normal has been fairly limited downside volatility and usually pleasant monthly statements.
However, we must always be aware that at some point the bears will move back in. They may have a pile of dirty laundry, or they maybe just want to raid your pantry and freezer. Perhaps your carpet needs covering. Maybe they just need a hug. Market normal can be flipped in a heartbeat.
This should not be a surprise. We have lived with these markets for decades. We know their tendencies, and we know we should always be prepared for the bears’ return. If we simply accept bears with all of the quirky personality eccentricities we have come to understand over the years, we can learn to embrace them when they return home for a stint — even if it means we must break out our patience pants.
I personally have not received any texts letting me know when the bears will be back home. Such advance notification would be really convenient. Until then, we focus on always being prepared while investing for the best everyday normal we can.
Quote of the week: Shelby Cullom Davis: “You make most of your money in a bear market, you just don’t realize it at the time.”