A Front Row Seat To History
Location: 3052 N Sheffield Ave, Chicago IL
Date: October 14, 2003
Time: 8th Inning
Score: Cubs 3 Marlins 0
I remember every single thing that happened in that moment. My wife and I were watching the Cubs potentially secure their first NL Pennant since the end of WWII. The smell of the beer, the phone call from my friend Bill congratulating us, the fact that we were up 3-0 with only 6 outs to go, the cool crisp October weather, our plan to run up to Wrigley and celebrate with all of Chicago (we lived .7 of a mile away). Then it all came undone as Moises Alou reached for a foul ball along the 3rd base line. A guy in a Cubs hat reached up (like any of us would’ve) and the rest is history. After the game was over I laid on my Ikea couch in the basement of my cookie cutter condo marinating in misery. I knew that I had just bore witness to a moment I (and the whole sports world) would never forget. The Bartman Game as it would come to be known is etched in my mind forever.
What you and I have seen over the past week and a half will be written about in history books. This moment, this event, will stand out on charts and in historical studies for all eternity. Here are a few things that have happened 1) The fastest 10% correction from a peak ever. 2) The fastest drop from a 52wk high to a 52wk low ever (S&P500) 3) AAPL’s dividend yield being HIGHER than the 10yr US Treasury yield 4) Macau gaming revenues dropping 88% in February 5) Chinese Services PMI falling below 30 6) People lining up at Costco to buy enough hand sanitizer to clean a garbage truck 7) an emergency Fed Rate cut. The Coronavirus outbreak is the first true global scare in the Social Media Age and it is teaching us SO much about ourselves.
It is 100% ok to acknowledge that you are human, that headlines surrounding this event have been nerve wracking and made you feel uneasy, but the actions you take right now (and in other turbulent times) will mostly determine your success as an investor. Whatever you decide to do will have a direct impact on your goals. I heard Future Mike whispering to me a few days ago: “Bro, you don’t need your retirement money for 20+ years, there has never been a 20-year period in history where stocks have been negative. Go about your daily life, wash your hands, stop touching your face, and keep saving. Also, our kids are still on our cell phone plan, cut them off at 25”.
If you still find yourself wanting to make changes to your investing strategy then this event has taught you a great deal about your risk appetite. You either need guidance from a professional or you just need to hold less equities. If you own a 100% equity portfolio you should go into it knowing that the max drawdown (since 1976) has been 50%. If you adjust to 40% Stocks 60% Bonds the max drawdown falls to 19% (remember these are historic averages). Even if you go 100% Bonds the max drawdown is still 12%! Investing IS RISKY but that’s why stocks return what they do.
You have a front row seat to not only a unique event in human history but to your own story. I promise you there will ALWAYS be a reason to sell stocks, there will always be a reason to be afraid, if it’s not Coronavirus it will be something else. Remember: what you see in front of you is not permanent just like the Civil War wasn’t or the Spanish Flu of 1918 wasn’t. Bad times seem like they’ll last forever but they don’t, and good times DWARF the bad times.
Don’t lose your sense of optimism about the future, as Andy Dufresne said to Red: “Hope is a good thing, maybe the best of things, and no good thing ever dies.”