On the blog this week, Jonathan shares important lessons on Change, Perspective and Market Timing to foster a mindset of abundance and investing with confidence.
Good afternoon. This is Jonathan Satovsky of Satovsky Asset Management. April 14th, 2020 with a video blog update.
Today, I want to talk about three things. Change, perspective and market timing.
We’ll start with change. Well, April 14th normally people would be scrambling to get their taxes prepared.
And we have a change. We’re extended until July because of the conditions in the world.
And we’ve had a change. People have to recognize that change is the only constant.
And people’s live are changing hourly, daily, week to week.
And people’s perspectives are changing.
I mean it was only 30 days ago that we were in the midst of the sharpest, fastest, bare market decline in history.
And 30 days later we are now in the midst of surprisingly to most people a bull market where prices have risen over 25% in a very short period of time.
And so change is a certainty.
So I want to give a little perspective about market timing.
And there is a lot of commentary out there of parallels and a perspective that conditions where you have 16 million people filing for unemployment in 21 days.
Paralleling conditions like the Great Depression. Creating a tremendous amount of fear.
Well, let me give you a little perspective.
In 1929, 1933, it took four years for the governments to put out fiscal and monetary stimulus to the magnitude or anywhere fractionally to the magnitude of what’s happened in the last 30 days and continues to happen from initiatives from central banks around the world.
So, for a little perspective, Vanguard has, does a study about the risk-o-meter. You know the speedometer of how much risk people are taking from 0 to 100 miles an hour.
And right now people’s risk appetites are at zero. Zero.
And I can confirm this is the case because we’ve been fortunate and having very loyal clients for 25 years.
Dealing with clients and prospective clients.
Talking to people. People are absolutely preferring to hold cash or Treasuries and have said frequently, daily: “Look, I know I’m a long term investor but let me hold the cash and we’ll buy when the market bottoms or we’ll invest when there’s good opportunities.”.
And that, I’ve been doing this for 25 years and I’ve listened to that story and I’ve myself gotten made plenty of mistakes and certainly the last 30 days there’s been a lot of mistakes to have been made because people need liquidity to survive.
But in trying to time the market and trying to out think and out maneuver everyone else in the world when everyone else is certain of an outcome something else is going to happen.
So when everyone is waiting for the perfect moment, they’re gonna be waiting for godot, they’re gonna be waiting forever.
That waiting doesn’t serve anyone well.
So stick to the plan. Create a structure. Have enough liquidity to get you through a year to whatever is gonna enable you to sleep at night and be indifferent to where prices are over the next 30 days over the next year.
So that you can survive and thrive and get to a place of abundance.
And more importantly for your own health and wellness.
If you get in the habit of thinking that you’re gonna have to time things day to day, week to week, it creates a lot of angst for the rest of your life.
And you’re going to think you’re gonna have to live that way rather than just embracing the idea of creating a structure that can create calm and confidence over a lifetime.
With that, enjoy the rest of your month and invest with confidence.
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