Never Give Up (02/07/2017)
On February 5, many of us were able to witness the biggest comeback in Super Bowl history, as the New England Patriots came back from a 25-point deficit to beat the Atlanta Falcons. To never give up is the lesson that resonates in my mind. Sometimes the outlook is bleak, and factors may seem against a positive result, but if you keep on track, with minor adjustments, you can overcome.
This lesson can be applied to investing. An excuse for not investing is available during any period in time. We have heard how the generation who lived through the Great Depression became financially conservative. This was an unfortunate occurrence, considering the U.S. stock market returned 9% per year in the 20 years after the Great Depression.
We could say the same about those who lived through the 2008 financial crisis. On the eve of the crisis, nearly two-thirds of American adults invested in the stock market. Today, that number stands at a near generational low of 55%. Another slightly disturbing fact is that, today, more American households buy lottery tickets than invest in the equity market. The chance of winning the lottery is approximately 1 in 292 million. In contrast, the S&P 500 Index has historically reached a new high every 16 days, a feat the market accomplished 18 times in 2016.
We can always invent reasons not to invest in the stock market. Back in 2009, fear of hyperinflation discouraged investing. Today we worry that the U.S. dollar is too strong. Back then, we worried that Planet Earth was running out of commodities needed to grow the global economy. Now we worry that the world has a too-large surplus of fossil fuels. We worried in the past that China was growing too fast and now we worry that their growth is slowing too much.
Sometimes your game strategy executes exactly according to plan and you continue on to victory. More often, this is not the case. You may find you are behind where you wish to be. To level out your chances of success, you must assess the situation and—instead of quitting--continue to move forward toward your goal. Small changes may be needed, but generally your overall objective has not changed. By continuing to work with a consistent plan, you should have a much better chance of achieving your personal victory.
February 7, 2017