“This time is different” – John Templeton, one of the most respected investors in history. He wrote those words in his 1933 classic, “16 rules for Investment Success.”
Taken out of context, it sounds like, ‘this time really is different.’ But the entire sentence read, “The investor who says, ‘This time is different,’ when in fact it’s virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing.”
So, is this time different? Yes, this market’s gyrations are caused by something new and scary, a virus that has killed hundreds of thousands of people worldwide. In no way do we want to diminish the pain so many families have felt as a result of Covid 19.
So, then, is this time different? No, not to an investor.
The cause of difficult markets is always different. The result for investors is always the same.
One of the benefits of having been licensed as a financial advisor since the 1980s is that I’ve lived through quite a few of these types of markets. And I’ve noticed a commonality. Every time it happens, investors say, “Kevin, you don’t understand, this time really is different. This time we invaded a foreign country.” Or, “This time some of the oldest financial institutions have evaporated.” Or, “This time the market dropped 22%… in one day!” Or “This time terrorists acted on US soil!” Or, Or, Or…
Separating the fear and emotion of the moment from the longer-term view can be challenging.
John Templeton’s words, written during the Great Depression, have proven true one hundred percent of the time. While we are in the middle of the current storm it feels like the world is ending as we know it. It isn’t. It didn’t end the last time investors felt like they do today. It’s not going to end this time.
Smart people all over the world apply their collective genius to problems like this and find a solution.
Every. Single. Time.
It’s hard to set emotions aside, especially when the headlines are so dire but we must. Investors have to hold steady and be disciplined in their approach. John Templeton, who was referred to as, “arguably the greatest global stock picker of the century,” survived and thrived through countless crises and investors will get through this one as well.
So in light of how history repeats itself what should you be doing now? That’s for a future post.