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The Seasons of Investing  Thumbnail

The Seasons of Investing

I love this time of year.  The days are long and it stays light until well after 9 o'clock.  Summer hasn't fully kicked into high gear and there's lots of time to reflect.  And in this time of global pandemic and lockdowns, it feels really good to get outside.   

Here in Upstate NY, we endure brutal winters with many dark, dismal and COLD days.  I'm actually not even talking about the cold and snow.  I'm talking about gray and bleak.  We'll often go weeks (if not months) without seeing the sun. It sometimes feels like it's never going to end.   

The upside:  Our summers are about as good as you'll find anywhere.

But winter can come very quickly, and it can hang around for quite a long time.  I've seen it snow in September.  And this year, we actually had snow on Mother's Day weekend.  

Like Central New York weather, financial markets can change on a dime

The S&P 500 reached an all time high on February 19, 2020. Over the next 16 trading days, stocks fell by 20%, the fastest shift from an all-time high to a bear market...ever.

From the lows reached on March 23rd, the S&P began a rapid ascent, or what is referred to as a "rip your face off" rally.  By June 8th, less than three months laterr, the stock market had advanced by an eye-popping 47%.  The largest and fastest stock market gain...ever.

If there's one lesson I hope our clients learn from this historic first half of 2020, it's how quickly things can shift - in both directions!   We have to learn to accept that some things are simply out of our control.   We can’t control the financial markets just as we can’t control the weather. 

When it comes to your investments, it is only common sense to prepare financially and psychologically for anything and everything.  Otherwise, you run the risk of making some very bad decisions at the worst possible time.  Such as selling all your stocks on March 23rd. 

Every excess causes a defect; every defect an excess.  Every sweet hath its sour; every evil its good.  For every grain of wit there is a grain of folly.  For every thing you have missed, you have gained something else; and for every thing you gain, you lose something.  Don't waste yourself in rejection, nor bark against the bad, but chant the beauty of the good.  

- Ralph Waldo Emerson

I think it's important to always remember that, like the seasons of life, the world of investing is highly cyclical and uncertain.  Financial storms, while infrequent, are inevitable and part of the ride.  Unexpected change should actually be expected, even welcomed

Good and bad are two sides of the same coin.  You can’t have one without the other. We need the bad to recognize the good.  Without an occasional bad day, we would never be grateful for a good one.  Without darkness, the light would be unrecognizable. 

Enjoy the good times, but respect the bad.  Without the losses, the gains wouldn't feel nearly as good. 



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