Weekend Reading: Why We Don’t Sell Edition
I've been pretty much incognito for the past month after taking one of the longest breaks of my adult life. No laptop, no Zoom calls, no blogging, and no financial plans (sorry!).
One of the nice side effects of unplugging is the lack of daily news, specifically around investing and the stock market – which tends to dominate my news feed and inbox.
Daily market fluctuations get smoothed out over time. In other words, yesterday's news (or last month's news) is but a distant memory.
For instance, something happened to cause markets to fall roughly 2% on July 29th. I couldn't tell you what happened (I was catching a train from Strasbourg to Zermatt), but I can assure you that some investors panicked.
Three trading days later, while we caught our next train to Annecy, markets had already ripped higher by 4.5%. Nothing to see here.
This is why the old stock market adage, “sell in May and go away” never made much sense to me. If you're going to go on holiday for the summer, just go away. We don't sell.
Speaking of selling, it has now been 3.5 years since Michael Burry famously tweeted one word: Sell.
Talk about causing an uproar. While he walked back his fire drill comment a few months later, perennial bears like Burry are constantly calling for the next big crash.
Meanwhile, had you simply held onto your global equity investments for the past 42 months you would have been handsomely rewarded with a cumulative 87.4% return.
Here's how a $100,000 investment in VEQT would have performed from February 1st, 2023 to July 31st, 2026:
- Dec 31, 2023 – $110,093
- Dec 31, 2024 – $137,473
- Dec 31, 2025 – $165,561
- Jul 31, 2026 – $187,374
Of course, markets don't (and won't) grow in a straight line. We will absolutely suffer through another downturn at some point.
I hope, by now, followers of this blog know that it's futile to try and guess when that downturn will happen. We stay invested in a risk appropriate portfolio, regardless of market conditions. We do not sell long-term assets because of a tweet, an article, or a hunch.
That approach has proven to lead to more successful outcomes than the alternative of selling stocks and going to cash…waiting for the all-clear sign to get back into the market. Never going to happen.
Besides, this is a long-term game. Stop thinking of the stock market like a casino where you've hit a lucky streak and need to cash out before you lose it all. Investing in stocks has a positive expected return over time. Gambling at the casino does not.
This Week's Recap:
As I've said, it's been quiet on the writing front for me while we enjoyed our summer travels. My wife and I went to Scotland for a week in July, and then we took our family holiday to France and Switzerland.
Scotland was incredible, as always, even with just a short stay in Edinburgh and Glasgow. But we miss the Highlands and need to prioritize a trip there soon to get lost in the Caledonian forest.
In contrast, France was crowded and hot. We had more ambitious plans for the outdoors (a 42km bike ride around Lake Annecy, cycling the Alsace wine route from Colmar to Eguisheim, hiking in the alps), but we had to really temper expectations due to the extreme heat.
That's okay with me. We approach travel like sampling a buffet. Taste a little bit of this, try a little bit of that, and then go back to our favourites for a bigger bite (or longer stay) at another time.
Zermatt was the highlight for all of us. The weather cooled (slightly) and we enjoyed three days of hiking as well as the slower pace of the car free village. We also happened to be there for Swiss National Day and Zermatt held a big party to celebrate.
We're back home now after about a month off of work (a first for me). Please be patient as Lindsay and I get back to the many (hundreds) of emails over the next few weeks and get back into the swing of things at home before school starts up again.
Weekend Reading:
After a life of saving, spending money in retirement can be surprisingly hard. In my experience working with clients, it's not the spending money part that is hard, it's the withdrawals from their savings in order to spend that money that causes anxiety.
John Stapleton with a good piece on Canada's manufactured war between young and old:
“We are witnessing the creation of a generational scapegoat, where seniors are being blamed for youth’s challenges.”
Of Dollars and Data blogger Nick Maggiulli looks at a century of US stock returns.
There's a lot more to retirement planning than a high value portfolio. Here's why Christine Benz objects to hitting a number for retirement.
PWL Capital's Ben Felix explains nine of the biggest myths in personal finance to help you make better decisions and avoid costly mistakes:
Are you richer than you think? If so, it's time to think about who is going to get your money.
Finally, this absolutely wild tale of a cottage country mortgage broker who lost $101 million of his clients' money.
It's good to be back. Have a great weekend, everyone!
