September 26

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This Time It’s Different

FAMILY UPDATE

My wife had her birthday this week and with each passing year, I appreciate her more and more.
In a family of six, with four kids going to school, germs invariably make it home. And once an illness takes hold, it sweeps through the house (sometimes more than once). When it's Mommy’s turn to get sick, the wheels really fall off.
We suddenly must subsist on Pizza, grilled cheese, and scrambled eggs. Bathing becomes optional and the kids’ bedtime schedule is altered, resulting in crabby kids, an exasperated Dad, and Mommy needing to come to the rescue while sick. My wife is truly my angel. I literally don’t know what I would do without her. For even a couple days.


Some of you may be understandably concerned with the markets right now. I can't emphasize enough how important it is to look at long-term returns. If you didn't turn on the TV for two years and then looked at the past, all of this would look like a temporary blip. Focusing on the daily ups and downs is bad for your health. I have zero concerns. But I still understand how hard it is to ignore...

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 Wofgang 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 $32,016.

Jerry Claxton

The year was 2020. Jerry Claxton had invested $10,000 into the stock market. He thought to himself, "We are in the middle of a global pandemic. Racial and social tensions are as high as I can remember. There is no way the economy can survive this. You would be crazy to invest in the stock market." Jerry took the money in cash and buried it in his backyard. Had he kept in the stock market, two years later on August 31st, 2022 his account would have been worth $12,735.

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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