I usually write to you about investing.
Companies, earnings, markets.
Often, it’s investing psychology.
My passion is helping Australians (and anyone from any other countries who want to read my scribblings!) improve their financial leaves.
It’s why I do this job.
It’s why The Motley Fool exists.
It’s why I write these articles.
And I want to highlight part of an article I wrote on March 23, this year.
As it happens (it was a pure fluke, trust me!), that very day was the low point of the coronavirus bear market.
And so much has happened since, that the first few paragraphs kinda shocked me. Here’s how I started that article:
“As I write this, my wife is in the dining room at home, helping our 7 year old son through his first day of learning from home.
“Earlier, I’d been to the supermarket. It must have been my lucky day, because there was toilet paper on the shelves for the first time in a week and a half. I’d bought some a couple of weeks ago on special, so we weren’t in dire straits yet… but I wasn’t sure how long it’d be until regular supply was restored, so I grabbed a pack.
“This is, of course, our new normal. At least for now.
“Thankfully, so far, we don’t have any family or friends infected with Coronavirus. And we’re not the exceptions. There are still a remarkably small percentage of the population diagnosed as having the virus. And even more thankfully, a very low fatality rate.
“Which I’m thankful for. But I’m thinking of those who haven’t been so lucky.”
I mean we all remember all of that. And Victorians are still struggling through their second lockdown.
None of us are out of the woods, yet. But March feels like a long time ago.
I went on in that article to acknowledge I was late in seeing the health and economic impacts of COVID-19.
And that none of us could predict the future.
But that I expected the future to be bright, even if it might be a bumpy and uncertain path to get there.
Then I finished like this:
“Yes, maybe it’s different this time. I can’t rule it out.
“All I can do is look at more than a century of market data — through wars, panics, a depression and a GFC — as a guide.
“The health news will get worse. The economic news will get worse. We will have a recession. Some small and large businesses will fail.
“Here’s the thing, though — I fully expect that those that survive will likely go on to thrive, as a group.
“So if those same businesses are selling for cheap prices, today, and you have both a diversified portfolio and the stomach to ride out the storm… Doesn’t it seem likely that current prices might be a buying opportunity (or, at least, that quality shares are worth holding rather than selling)?
“I’m still investing. Not because it’s guaranteed, but because history suggests that, done well, it’s a wonderful way to build wealth, despite the volatility.
Fast forward 5 months and 8 days.
Since March 23, the All Ordinaries Index (ASX: XAO) has gained 37.2%.
With dividends, the market is up 38.2%.
No, I didn’t know the future.
I had no idea the recovery would be that fast, or go that far.
I have no crystal ball.
I take no victory laps.
I have no idea what happens next… in the short term, at least.
I just wanted to remind you that pessimism can cost you a lot of money.
As I’m wont to say: It’s far more profitable to be optimistic and occasionally wrong, than to be pessimistic and occasionally right.
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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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