3 Things 5-17
05/17/2021 Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it. Thing One Fearful And Greedy “And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful” World-renowned investor, Warren Buffet made the now-famous statement above in his 2004 letter to shareholders. I mention it here because it seems appropriate given the recent market volatility. And I also share below a small section of a chart that has tracked the 100-year history of the DJIA (Dow Jones Industrial Average). The chosen section covers the period that includes the beginning of the last “financial crisis”. At the peak (point 112, July 2007) that precedes the lowest point on the chart, the DIJA was at 14,000. At the low point on the chart (March 2009) it was at 6547, or just 47% of the July 2007 peak. Today it is over 34,000, or more than 5 times the 2009 low. If you'd have put 10,000 in when everybody was fearful in March of 2009, you'd have over $50,000 today. That's not to say that your $10,000 would've gotten to $50,000 in a calm, linear fashion. There were definitely spikes and dips along the way. It's also not to say that the next stop would be $60,000. But if you've got the money to invest and the patience to endure the uncomfortable times, maybe there's something to Buffet's contrarian advice.
Thing Two The Minimum Wage Millionaire Debate Revisited Last week I shared with you that I’d had a conversation with a friend about facts versus how things are portrayed popularly. The conversation started with a discussion of police brutality statistics and ended with a blueprint for becoming a millionaire making minimum wage. Sharing the highlights of that conversation led to another conversation with a good friend who reads this newsletter. He said to me (as closely as I can remember), “you know, I can think of a hundred ways to debunk what you said, but I won’t.’ As he explained what he meant by that, it became apparent to me that his point was the same as the one that the friend with whom I’d initially had the conversation was trying to make which was that it’s not as easy as I was trying to make it sound. In fact, friend one said something to the effect of, “sure he could save a million dollars but he’d have to live off beans and rice.” Friend two, playing devil’s advocate, had a similar concern but concluded that the idea was directionally accurate enough that the final amount saved was irrelevant. In other words, what if he didn’t save enough to get to a million because life’s circumstances intervened but he still made a conscious decision and followed it with the appropriate level of commitment to saving for his future self? Would he be closer to whatever the stated goal was and much better off or not? By the way, I was not trying to make it sound easy. I was trying to make it sound simple. I learned from another good friend a long time ago that simple and easy are two very different things. But the more work you put in, the more likely it is that simple and easy begin to converge. Decide where you want to go. Start where you are. Forget about “they” and hold yourself accountable. It is that simple. But it’s up to each of us to make it easy, a little bit at a time.
Thing Three Just A Thought ""Do not go where the path may lead, go instead where there is no path and leave a trail." - Ralph Waldo Emerson