Six Thoughts On Losing $1,000,000

Note: I wrote this post last week before war broke out. It’s silly and narcissistic to worry about money when others are fleeing for their lives and children are dying (<– WARNING! This links to a story about a child killed in the attack and is graphic, tragic, and all-around horrible.).

#perspective

My normal modus operandi is to not pay attention to news that isn’t local. Cable news channels are toxic places, broadcasting sensational stories designed to scare the shit out of us. Even if they produced quality information, there is little that you can do, so most of the time it’s best to keep your distance.

I’ve had a more difficult time with the war. Perhaps it’s because I know a lot of Ukrainians. Or maybe it’s the distant threat of nuclear warfare (this terrified me as a kid!).

Whatever it is, hopefully, the war ends soon and perhaps some good will result. Wars provide opportunities for resets. Borders are redrawn, alliances strengthen, and the world operates a little bit differently. Perhaps this will lead to a positive reset in the world.

Here are some organizations that Mindy and I have donated to:

• Save The Children
• Unicef
• Doctors Without Borders
• care
• Red Cross
• IFAW

Six Thoughts On Losing $1,000,000

Our portfolio peaked in early November. Around 11/2, our net worth briefly topped $5,200,000. Last week, Mindy and I were down $1,000,000:

The past version of me would have freaked out. I lost my mind during the Great Recession, stopping most 401(k) contributions. Big mistake.

Now, I couldn’t care less. I wrote this post to help those in the “freaking out” category.

Stock prices don’t always reflect the condition of the company or economy.

Over the long-term, a stock price will eventually reflect the state of the underlying business. Benjamin Graham famously explained it like this:

In the short run, the market is a voting machine but in the long run, it is a weighing machine.

One need look no further than the past week to see how the markets were shaken up by geopolitical strife. Over the long-term, the event will pass. Mr. Market will pull his pants up and the world will carry on. That or we all nuke each other, cockroaches will rule, and none of this stuff matters.

Thought #1: Be in it for the long-term. If you’re into individual stocks, you should pay more attention to how the company is doing than the stock price. If you invest in index funds, the overall economy is what matters.

Downturns are healthy.

Just like humans, Mr. Market is sometimes euphoric and sometimes sad. And this is healthy. If someone is always happy, there is either something wrong with them or they’re taking illegal drugs. See Inside Out which explains this much better than I ever could. Markets go up and down, but over the long-term, mostly up.

Thought #2: Don’t freak out the next time Mr. Market loses his mind. This too shall pass.

Putting it in perspective makes it easier.

If you’ve been in the markets, you’ve had a very, very good decade. It’s better to be thankful for the market’s incredible run than to get worked up over a hiccup.

In our case, our net worth reached $4,200,000 last just 5 months ago. So, it’s silly to be upset that it’s now back at that number.

Thought #3: Don’t get anchored to a recent data point. Again, play the long game.

Sequence of returns risk doesn’t need to be scary.

If you figured out a way to retire in your 30s or 40s, you probably did one of two things:

• Worked in a high-paying career. You got paid a lot because you were in demand and worked hard to educate yourself. If you retired a couple of months ago and are worried, it probably won’t be hard for you to go back to work or find a new job.
• Hustled your ass off and figured some shit out. Apply the same skills that got you to financial independence to figure out how to not go broke.

Thought #4: Stop being scared. Stop underestimating yourself. You’ve got this.

Look to history for comfort.

The world has been through a lot of shit over the past 100 years. Recessions, depressions, world war. And we’ve survived and thrived.

Thought #5: Your money (and your life) will be OK.

Your life is still pretty great.

There are some bad things going on in the world right now. However, if you’re reading this, you’re not hiding in your basement trying to survive a long-distance artillery attack or on the run to a country that will accept you as a refugee. Your child hasn’t died. Life is good.

Thought #6: If you have the means, consider giving. Here is my list one more time.

• Save The Children
• Unicef
• Doctors Without Borders
• care
• Red Cross
• IFAW

If y’all know other good charities, leave them in the comments or shoot me an email and I’ll add them to this list.

Famous Last Words

Sophie Scholl was an anti-Nazi political activist who was convicted for treason in 1943. Here are her last words before she was executed by beheading for distributing anti-war leaflets:

How can we expect righteousness to prevail when there is hardly anyone willing to give himself up individually to a righteous cause…. It is such a splendid sunny day, and I have to go. But how many have to die on the battlefield in these days, how many young, promising lives. What does my death matter if by our acts thousands are warned and alerted. Among the student body there will certainly be a revolt.

And the last words of Ukrainians defending Snake Island (click the photo or here to see the video):

Be good to yourself and each other.