Worrying can be okay
“The market climbs a wall of worry” and “This time is different” are two of my favorite quotes regarding investing. But what do they mean? The chart referenced below helps explain some of this. However, when it comes down to it, the two quotes have one thing in common: there is always something to worry about, and that is a good thing. In this article, I hope to help explain these a little further for you.
Past History Worry
I remember 2015 like it was yesterday. I worked at a financial institution and helped clients develop investment strategies within their 401(k)’s. Early in the fall, it was beginning to look like politics would change forever, the US would never be the same, and the unthinkable was about to happen; an outsider with no political experience had a legitimate chance of becoming president. People couldn’t get over that something that hadn’t happened before was about to happen. People couldn’t sell fast enough. (Please reference the chart for how that played out).
Then, in 2020, COVID forced people and businesses to change their behavior overnight. The “new normal” was to stay inside and do your part by binging Netflix. Another excellent buying opportunity presented itself.
Wars and terrorist attacks have also impacted the market and economy throughout history.
Worry = Buy
The fact is that when there is the most worry about a generational change or a “new normal,” and people fear the most, it is generally the time that makes the most sense to buy. “The market climbs a wall of worry” refers to people selling out and waiting for financial storms to blow over. As this plays out, it forces participants to return to the market from cash or other investments and can provide an excellent tailwind for growth. Money market funds currently hold 1.9 trillion dollars, the highest in history. In 2017 that number was under 700 billion.
Today’s Current Worry
So, what wall of worry is the market climbing now?
Finding a pundit that is not calling for a recession is almost impossible. AI is replacing entire workforces. Regional bank failures, the Fed raising rates at the fastest pace in history. The market has an uncanny ability to predict the future and often moves before inventors figure out why. These things may have been priced already.
As you can see from the chart, there is ALMOST always a reason you can justify getting out of the market. And it is rarely the best move on the chessboard to act on those instincts.
Take the worry out
Whitaker-Myers has a team of financial advisors that can help answer your questions or concerns about today’s market. They can help discuss strategies that make you feel comfortable and confident with your choices. Schedule a meeting today if you need to speak to one of our advisors.
RISK ASSETS
August 2, 2023
Jake Buckwalter
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