Most things that are worthwhile are a struggle.
If you want to become great at an instrument, you’re going to have to practice a lot. Yo-Yo Ma, the cello supervirtuoso, practices about 2,000 hours per year.
If you want to become a great athlete, you’re going to have to put in lots of time training and take care of your body. Hello, broccoli!
If you want to become a great coder, you’re going to have to put your hours in behind the keyboard.
But this is good news because sitting in front of a TV doesn’t make humans happy. Overcoming adversity does, even if your version of struggle is squatting 500 pounds. We learn and grow when we struggle. And when it’s over, we’re happier.
The times where I’ve grown the most have come from willingly putting myself in uncomfortable situations. Training for and running a half-marathon was one of the hardest things I’ve ever done, but my resting heart rate was never so low. Volunteering to speak in public was incredibly difficult, but now I’m a better, more confident person.
We gain knowledge and strength when we venture outside of our comfort zones. Voluntary discomfort is good.
Successful Investing Is Another Struggle
The black swan has arrived and its name is Coronavirus. On 2/19, my net worth hit an all-time high of $2,585,215. Last Friday, it was down to $2,443,857 for a loss of $141,358.
An older version of me would have been going crazy over these losses. On the surface, the thought of losing $141,000 in a couple of weeks is terrifying. But, after two decades of thinking about investing, downward swings don’t bother me at all. Here are my best tips for dealing with Mr. Market when he is unhappy:
- Mentally prepare yourself when the sun is shining: The time to plan for the storm is when the weather is good. Just like a prenuptial agreement, formulate your plan when times are good and your brain isn’t consumed by worry. Part of your plan may be having a couple of years of cash set aside to ride out rough times.
- Know that this is natural: In the short-term, stocks are volatile. Trying to predict these moves is gambling. Over the long-term, factors like population growth and productivity gains create economic growth which leads to appreciation:
- Envision yourself 10 years from now: Whenever something is bothering me, I ask whether it will matter in a year from now. The answer is almost always No. Same with markets. If your time horizon is long-term (and it should be), you probably won’t remember much about the Coronavirus by 2030.
- Don’t stop investing: Warren Buffett once said something like: “The stock market is the only store where people head for the exits when everything is on sale.” If you’re a long-term investor in the accumulation phase, you should be happy when stocks go down.
- Compared to the worst-case scenario, this isn’t so bad: After a long battle with cancer, a family acquaintance died last week. He was 46, the same age as me and leaves behind a wife and young child. If the main thing you worried about last week was the stock market, life is probably still pretty good.
It’s Not That Bad. Yet.
For all of the folks in a tizzy about the markets, consider that the S&P 500 is back to where it was in mid-October, about four and a half months ago.
Not much to see here.
But, maybe you’re saying this:
What if the Coronavirus hits America hard! Stocks could go down 30% or more!!
Sure, that may happen. School may be canceled for a month or longer. Businesses will suffer as workers and shoppers stay home. It will be a tough couple of quarters for the economy.
But then, the virus will go away. Life will pick back up and humans will move on too. Mr. Market will recover as he always has.
The Struggle Is Real, But Also Profitable
Morgan Housel tweeted this last week:
Napoleon’s definition of a military genius:— Morgan Housel (@morganhousel) February 28, 2020
“The man who can do the average thing when everyone else around him is losing his mind.”
Same in investing, especially weeks like this.
So, keep doing the average thing. Keep putting money into your 401(k) or whatever you normally invest in. Know that you’re getting a discount because of a flash sale.
The world will return to normal soon enough and stocks will follow.
At some point, another black swan will show up and shake the world up a bit. But that will pass too.
In the meantime, embrace the discomfort. You’ll be wealthier for it.
And wash your &*%!ing hands!
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