Anyone looking at the stock market will have tears in their eyes. I look in despair when I see what has happened to my portfolio. And last week I showed my kids what has happened to their values, and neither were too pleased with my performance. According to them, it’s all my fault. It had nothing to do with all that money Governments around the World splashed about.
One of my medical clients showed me what has happened to their portfolio, and this resulted in a bucket load of crying followed by the emptying of many bottles of alcohol. I was not happy indulging in the crying, but quite happy to consume the single malt whisky that was on offer.
But after a bottle or two (maybe three – I can’t remember) this is what I told them.
Firstly, the money invested is for their long term and, if it is money they will not need for the next 5-10 or 15 years, they need not worry. The stock market works on a short-term basis, not the long term so short-term movements (whether up or down) may fill you with joy or scare the living daylights out of you, but you should ignore them.
If you put short-term money in stocks or (stupidly) in crypto, you are not doing your investments any justice.
Secondly, I think of my share portfolio like I do my business. It’s there to provide me with an income and dividends over the time I own and invest in it. There will be good times and there will be some bad times where expenses come about totally unexpectedly and out of the blue and throw me in the red. That is the nature of business and how the world works.
But I know that over the long term if I do on average the right things owning my business makes sense. You won’t sell your business when things get a bit rough, so experts say don’t sell your share portfolio because the share markets become a bit shaky.
But at the moment it’s not shaky. It is like an earthquake. Maybe. But how many people move out of California because they are a few notches on the Richter scale? Hardly anyone.
Would I be better off selling my business when times are a bit crap? Would a Californian be better off moving to North Carolina? Probably not.
So my rule is a bit simple – never sell the business – and don’t sell and move out when the grounds shakes.
Because if you are investing for the long term, investing correctly and don’t need the cash it does not matter what the price right now is.
This cheered my client up a bit but then they were a bit upset. ‘You could have told me that before you let me cry and consume so much booze.’ They said.
I just smiled and finished the rest of the bottle. You only learn the truth from a fool or a drunkard. Which one I am I will leave up to you.