The Four Most Dangerous Words

To quote Sir John Templeton, “The four most dangerous words in investing are: this time it’s different.”

I’ll show you what I mean through a few colorful anecdotes.

Robert Pinochle
The year was 1930. Robert Pincohle had $10,000 invested in the stock market. (A lot of money in 1930.) Robert thought to himself, “We are in the middle of the worst economic downturn this country has ever seen.” He was right about that, but what he did next was a mistake. He thought, “This time is different. The markets are dangerous.” Robert took all of his money in cash and buried it in his backyard. Ten years later, in 1940, his $10,000, had he had kept it in the stock market, would have been worth $11,925.

John Canterbury

The year was 1940. John Canterbury had $10,000 invested in the stock market. He thought to himself, “We are in the middle of another World War. Countries are collapsing! The economic predictions are dire. This time is different!” John took the money in cash and stored it under the bed in his wife’s best Tupperware. Ten years later in 1950, his $10,000, had he kept it in the stock market, would have been worth $35,035. And his wife wouldn’t have had to re-buy all those containers!

Earl Pickett
The year was 1950. Earl Pickett had $10,000 invested in the stock market. He thought to himself, “The Communists have infiltrated our government. I’m pretty sure my neighbor Bob is a Commie. A Communist takeover spells disaster for our country, and the market. This time is different. ” Earl took the money in cash and hid it in his collection of Elvis Presley nesting dolls. Ten years later in 1960, his $10,000, if he had kept it in the stock market, was worth $44,694.

Paul Kowalski
The year was 1960. Paul Kowalski had $10,000 invested in the stock market. He thought to himself, “The stock market has been going up for nearly 20 years. We are due for a crash. This time is different.” Paul took the money in cash and hid it in the stuffing of his Day-Glo orange beanbag chair. Guess what? Ten years later in 1970, his $10,000, had he kept it in the stock market, would have been worth $21,959.

David Malkin
The year was 1970. David Malkin had $10,000 invested in the stock market. He thought to himself, “This country is falling apart. Vietnam. Oil embargoes. Hippies. This time is different.” David took the money in cash and buried it in his backyard, putting his Pet Rock on top to guard it. Ten years later in 1980, his $10,000 would have been worth $22,555 … if he’d kept it in the stock market. Bummer, man.

Tom Chadwick
The year was 1980. Tom Chadwick had $10,000 invested in the stock market. He thought to himself, “The Cold War menace is looming. Nuclear tensions are at an all-time high. Russian paratroopers could descend from the skies at any time. This time is different. ” Tom took the money in cash and buried it in his backyard. Ten years later in 1990, his $10,000, had he kept it in the stock market, was worth $36,813.

Wolfgang Applebottom
The year was 1990. Wolfgang Applebottom had $10,000 invested in the stock market. He thought to himself, “Saddam Hussein has us on the brink of war. Stocks are overvalued. We haven’t had a significant recession since the early 70s. This time is different. The markets are dangerous.” Wolfgang took the money in cash and stuffed it into his wife’s collection of Beanie Babies. Ten years later in 2000, his $10,000, had he kept it in the stock market, was worth $49,907. Worse, his wife’s McDonald’s International Beanie Bear would have been worth $10,000, except Wolfgang tore all the stuffing out to hide his cash.

Bobby Bickleberry
The year was 2000. Bobby Bickleberry had $10,000 invested in the stock market. He thought to himself, “The tech bubble is bursting. I’m hearing rumors of a long-term recession. This time is different. The markets are dangerous.” Bobby took the money in cash and stored it in a safety deposit box at the bank. Ten years later in 2010, his $10,000, had he had kept it in the stock market, would have been worth $11,500 (after two of the worst bear markets in U.S. economic history).

Derek Johansen
The year was 2010. Derek Johansen had $10,000 invested in the stock market. He thought to himself, “We just experienced a decade with two historically awful recessions. I am spooked. No more investing for me!” Derek took the money in cash and locked it in a fire-proof safe, which he kept in his closet. Ten years later in 2020, his $10,000, had he had kept it in the stock market, would have been worth $34,016.

Maybe this time isn’t different. Maybe it’s time to embrace a financial vehicle that has had an almost uninterrupted string of success for decades.

 

Be Blessed,

 

Dave

 

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