Survive and Thrive

The past few weeks have been difficult for many investors. The S&P 500, most people’s benchmark for the market, is down 6% since the November 2021 peak and 9% from the January 2022 peak. Growth stocks, the darlings of the early Covid surge have taken it on the chin harder (and for longer).

We are not immune to the shock of watching our investments diminish in value. Like all humans, we are prone to psychological biases such as anchoring and loss aversion. At times like this, it helps to zoom out and fall back on our principles. That 9% drop seems like a lot, but even so, the S&P is up almost 15% since this day one year ago (close of January 22, 2021). Turn the clock back further, to this day two years ago when Covid was still contained to China. If you had put $100,000 into the S&P back then, it would be worth $133,824 now. It did not, you may recall, get there in anything approaching a straight line. Ask yourself how much it would have cost you to give in to the fear back then. There is no reason to think that today’s status is a permanent state of affairs either.

For most investors, this is a moment full of opportunity—a market "on sale" compared to a few weeks ago. If you fancy yourself a shrewd investor, this is your moment to deploy. For most people with years of employment ahead of them, the correct strategy is simple: "keep saving money and remember that the markets generally go up.

If you are invested for the long haul, stay that way. If you have a lot of cash piled up waiting for a good time, now is that time. We never know when markets will recover and make new highs—we know that they do—and those recoveries frequently come before people feel comfortable. Do not be sitting on the sidelines when that happens.

Finally, some thoughts on our management approach. We feel like it’s March 2020 again in. We use precipitous drops in the markets to trade-up, typically selling off portions of large winners and redeploying to companies that we think have the largest capability to snap back when the current malaise blows over. It’s worked before and we see no reason it won’t work again.

We always invest like our best days are ahead of us. You probably should too. Let us know if you have any questions or concerns!