It's Not Different This Time

On Wall Street you’ll often hear the phrase “it’s different this time” to describe what’s going on.

More often than not that statement is correct. There’s a confluence of events that are impacting the market and you need to understand that each situation is unique.

Let’s use right now as an example.

Our supply chains broke due to a pandemic, wages rose rapidly as people reshuffled their careers, we poured a bunch of money into the economy to stave off a collapse, a combo of those has kicked off high inflation, now the US Federal Reserve is forced to hike rates to fight inflation, thus crushing stocks that everyone owns, and a war broke out in Ukraine.

All of that has combined to kick off one of the worst starts to a year EVER for the bond market and one of the worst starts to a year since the 1950s for the stock market. It’s super rare to see both of those occur at the same time and yet here we are.

Did anyone predict this on Jan 1? Of course not, the future is unknowable. Does anyone know when the pain will end? Come on, you know the answer to that too.

While unease permeates the room, I do know one thing: it’s not different this time with respect to YOU.

Events come and go, markets go up and down, but human behavior persists. The “Trinity of Trouble” is Fear, Anxiety, and Uncertainty and you are probably feeling all three. 

Will you allow those to overcome you like it’s doing to others?

Let me give you one of the most important pieces of wisdom I know: The last durable edge in investing is arbitraging human behavior.

The ability to be patient is a superpower in a world increasingly focused on the short term. If you can just go about your life, doing the average thing, sticking to your game, and let everyone else do the panicking, you will be successful. 

Let me ask you a question:  do you want to grow and compound your wealth or do you want to keep interrupting it and falling prey to the same mistakes humans make over and over again?

Everything good compounds. Money, relationships, knowledge, love.   

If you constantly interrupt your money because “hey things seem scary right now” you will never succeed. 

I loved this image from @visualizevalue because its simplicity is elegant.

Are you going to start over again every single time the news tells you to be afraid?

Will you fall prey to the mistakes every other investor in the world is prone to or will you forge your own path?

You decide.