This Time Is Different

FAMILY UPDATE!  

I hope everyone enjoyed reading the note from my daughter, Senay, last week.  She really set me straight!  My other kids want to write a family update, so maybe I will let them in the future (as long as it casts me in a positive light).

I attended Alex's soccer game this week, which was drizzly, gray, and cold.  Did I get transported back to Pittsburgh?  What is going on?  I think El Nino is to blame.  My orchids are furious. I've needed to buy (and actually wear) long pants.  When I moved here, I told everyone, "I intend to wear flip-flops and shorts 365 days a year."  Many years I have accomplished this feat.

For my New Year's resolution, I have decided to eat healthier (for real this time).  I'm 47 now, and after I visited my doctor, apparently, I can no longer eat whatever I want (bummer).  Instead of going crazy with it, I will make slow steps to alter my diet in a way that I can maintain for a lifetime.

Step One:  No more Coke.
Step Two:  Limit myself to four cookies when Senay bakes them.
Step Three:  No frozen pizza.

Baby steps...

Above is the "smokeless" fire pit.  I don't know how, but it really works.

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 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 in his wife’s best Tupperware under the bed. 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, would have been 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 buried the money in cash 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 Beanie Babies collection. Ten years later, in 2000, his $10,000, had he kept it in the stock market, was worth $49,907.

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 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 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 with an almost uninterrupted string of success for decades.

Be Blessed,

Dave