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The photo in today’s Periscope shows two tents on the side of Mt. Whitney. In the yellow tent, I am sitting. In the red tent, sits a friend of mine. We had just climbed to the summit and back again safely. It was April, 2023. We enjoyed sunny skies overhead and a lot of snow underfoot. I felt blessed for the entire climb. Whitney is the highest mountain in the lower 48 states. A winter ascent is a good test of skills for aspiring mountaineers. For me, a few days away from the short-term madness of equity markets will pay me huge “memory dividends”.
Learn More about our investment decisions
We have survived a bear market, you and I, if we did not sell into the fear over this past year. As we have discussed previously, see links below, investments do not require good news to do well. By and large, the value of our investments has increased at the same time as the bad news has increased. The two with each other got little or nothing to do.
So what’s up with that?
Equities are like the weather, but investments are like seasons
The weather is pretty unpredictable; in Colorado, it always has been. I just returned from Southern California where the weather in LA was cool, damp and the beaches were empty. A few hours drive North on the 395 the weather was beautiful! I visited Mammoth Ski Area where the sun was shining and the amount of snow on the ground hit historic records. In fact, I would say the skiing in Mammoth is prehistoric.
All around the world, the weather is unpredictable. The weather has more to do with our investments than the news. In the short-term, weather is unpredictable. In the short-term, our investments are unpredictable. In the long-term, the weather in the winter is colder than the weather in the summer. In the long-term, equities earn higher returns than fixed income, like bonds, annuities and bank accounts. In the short-term, the weather in the mountains might be warmer than the weather on the beach. In the long-term, the mountains are cooler, of course. And similarly, for the investment accounts, the short-term volatility of equities is likely to be uncomfortable as they bounce along towards their long-term, comparatively high rates of good returns for patient investors.
Equities are like the weather, unpredictable in the short term. But investments are like seasons, predictable over long enough timeframes. In fact, equity investments are like the climate over a long period of time.
I hope you plan and then take your next vacation with gusto. Do it soon! The news and your happiness, one with the other, have little or nothing to do.
