When markets are volatile, the refrain “stocks always go up over time” may not apply to your schedule, to your retirement life.
Because when you’re in retirement, time is compressed. You don’t have the time you once did. You’re no longer drawing a paycheck, and in my conversations with you, you tell me how unnerving that is.
Which is why at Your Survival Guy, we talk about “diversification and patience built on a foundation of value and compound interest,” a phrase coined by my father-in-law Dick Young.
As Jack Bogle advised about volatile markets, “Don’t just do something, stand there.” A phrase easier said than done when your portfolio is not diversified and well balanced. The pain is more severe—shocker—when a portfolio is sector-weighted and uses leverage to “juice” returns. You can see how that’s playing out right in front of you. It cuts both ways.
Charlie Munger would say that if you aren’t comfortable with the prospect of your stocks declining by 50% at any given time, then you might not want to be an investor in stocks.
When you look at companies as an investment, you’re looking at a stream of income or earnings. Think of them as interest payments and duration as you would for bonds. Some companies will have a long duration, requiring patience.
Remember, Amazon was left for dead many times.
Action Line: There’s a difference between being a Prudent Man—a prudent investor—and being a speculator. I think you know which one I like. When you’re ready to talk, let’s talk. But only if you’re serious. Email me at ejsmith@yoursurvivalguy.com.
Originally posted on Your Survival Guy.
