Herding Snakes with St. Patrick
Happy St. Patrick’s Day to you. May your pint ‘o Guinness be darker than your worst day.
Today we celebrate the Feast of St. Patrick, the guy credited with bringing Christianity to Ireland. Irish lore says he drove the snakes out of Ireland as well.
In the Costanza household, Frank Costanza, George’s father, always began Festivus with the airing of grievances. I’ve started my annual St. Patrick’s Day tradition, the annual driving out the financial snakes in your life.
Financial snakes are the myths, the sayings, the adages, and Wall Street witticisms that our culture just assumes are true.
Like…”Money is the root of all evil”. Clearly not true as the Bible states in 1 Timothy: “For the love of money is the root of all evil…”. That would be a financial snake to drive out.
Financial snakes are a distraction from your real goals, financial and otherwise.
Mainstream media is full of snakes. The snakes could be the crisis du jour or the snakes could be the good folks presenting them.
Drive them out faster than Rip driving a herd north on the Yellowstone Dutton Ranch.
This year’s snakes:
The belief that the good folks on Fox Business Network or CNBC have my best investing interests in mind.
Wrong. As much as I like Stuart Varney, he doesn’t give a rip what I do with my IRA. He only really cares about his shares of Microsoft he often mentions to guests. And he wants to put on a good show.
But your investments, nah, he wants you to watch again tomorrow. If he told you to focus on your long-term goals and your 5-year time frame, you wouldn’t need to watch tomorrow. See, mainstream media wants you to believe you need to watch again tomorrow in case there’s something you need to do. There’s not.
Because if you don’t watch, and I don’t watch, and other folks don’t watch, they can’t charge as much for ads if fewer folks are watching. That leprechaun don’t drink.
That’s a snake you can drive out.
Believing that you, or anyone can time the market…knowing when to buy, when to sell, and when to buy again. Amateur investors often propose selling their investments when they sense a Crisis du Jour will send the market lower. They say they’ll sit on the sidelines, and wait and see what happens. And then get back in when things look good again.
The problem is one has to be right twice. Know when to get out ahead of time, before the fall, and then know when the bottom is so you can get back in before the rise. Nobody knows that.
And you know what the average investor does. Gets out after the trouble is already brewing and his investments have fallen in value. Locking in his loss by selling.
And then he waits for CNBC, FBN, and USA Today to tell him the market is hitting new highs. And then he gets back in. Buying high, after selling low.
Just the reverse of what Grandpa told him to do, “Buy low, sell high, sonny boy”
Market timing, that’s a snake you gotta drive out.
Along with the emotions that make you feel market corrections are all bad. I’m not saying they should make you feel good, but something so common should not make you feel anything at all, expect maybe an observation that, look, another one.
The average annual correction since 1980 has been 14%. That means every year, on average, the market goes down 14% from its high to low point. We don’t flinch. Heck, most of us don’t even notice.
Yet over that time period the market has averaged an annual compound return of 12%.
Sure, nobody likes to see the value of their investments go down. It’s not always easy to watch. But if it was easy, anyone could do it. And you’re not anyone. You’re an investor, not a trader or speculator.
It’s called an investment after all, not a guaranteesment.
Drive that “corrections are all bad snake” right back into the Irish Sea.
Were the snakes that St Patrick drove out of Ireland real, or just a metaphor for the less than Christian behavior of the time?
These financial snakes are only real if you believe them. Best drive them out, or better yet, don’t them them in.
May the raindrops fall lightly on your brow. May the soft winds freshen your spirit. May the sunshine brighten your heart May the burdens of the day rest lightly upon you. And may God enfold you in the mantle of His love.