Climbing the “Wall of Worry”

October 1, 2021

Climbing the “Wall of Worry”

 

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” Legendary investor, Sir John Templeton

 

Sir John believed that bull markets ultimately run out of steam, or to put a different way – using a Wall Street proverb coined in the 1950s – stock markets climb a wall of worry.

Read the financial news websites, or for a more dramatic take, get your financial information from TV/Radio, and you will hear the doom/gloom drumbeat. 2021 is no exception. Year-to-date (through September), the S&P 500 is up about 15%. That is strong stock performance, despite the Covid Delta variant, extreme political partisanship, rising US debt and inflation concerns, etc.

Worry is an interesting phenomenon. Generally, what you worry about in the present seems much worse than anything in the past, simply because you are living and working through it. The uncertainty and anxiety are felt today. This may cause us to overweight current concerns and result in a myopic, rather than long-term, view of the future.

For long-term investors, it is advantageous to maintain a long-term perspective. Remember a key tenet of wealth-building success: If your financial plans have not changed, do not change (or worry about changing) your investment strategy!

 

Concerns – Past & Future

What did investors worry about in 2019? How about 2018, or 2008 (or how about 1988, 1977, 1963, 1955, 1943, 1931!). Generally, we cannot remember, and the reason?  Worries tend to work themselves out. We adapt and adjust to our changing circumstances, especially the bad ones.

What will we stress about next month or next year? It could be a continuation of present concerns, or it could be something entirely different. As reliable as gravity, it will be something!

In our experience, I have seen that investors who focus on the “worry of the day” experience greater stress and are more likely to make an unwise investment decision. Worrying is part of the markets. It’s not worth the psychological or financial cost.

If you have any concerns, please let us know. One of our greatest values (and joys) is to help you know what is worthy of your attention and concern and what should be ignored.

Please reach out to set some time for a cup of coffee (virtually or live), for an opinion or SECOND opinion on your financial planning questions. We look forward to speaking!

 

 

 

©2021 The Behavioral Finance Network. Used with permission

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