A message from Paul

March 9th 2009 was the eleventh anniversary of the crescendo of global panic that marked the bottom of the bear market of 2007-09.

It is to me a thing of the most wonderful irony that the world has elected to celebrate this iconic anniversary with – you guessed it – another epic global panic attack.

As we all know by now, the precipitants of this decline have been (a) the outbreak of a new strain of virus, the extent of which can’t be predicted, (b) the economic impact of that outbreak, which is equally unknown, and (c) most recently, the onset of a price war in oil. (That last one is surely a problem for everyone involved in the production of oil, but it’s a boon to those of us who consume it.)

The common thread here is unknowability: we simply don’t know where, when or how these phenomena will play out. And in my experience, the thing in this world that markets hate and fear the most is uncertainty. We have no control over the uncertainty; we can and should have perfect control over how we respond to it.

Or, ideally, how we don’t respond. Because the last thing in the world that long-term, goal-focused investors like us do when the whole world is selling is – you guessed it again – sell. Indeed, I welcome your inquiries around the issue of putting cash to work along in here.

In 2008 broad markets dropped approximately 57%, in 2000 the drop was in the 50% range. In 1987 markets dropped 30% in one day. Severe market declines should not be a surprise. However it is normal and ok to be concerned. It is also ok to run your well thought-out plan.

If you have any questions regarding your plan please let us know.

Be calm and implement your plan.

Sincerely,
Paul