Lifetime Milestones & The Power of Time

By David B. Armstrong, CFA | Aug 06, 2019 | Invest My Wealth, Weekly Market Commentary

Sometimes we forget about the power of time.  Big historical moments are memories in our lives, but we tend to live in the present…or in the past few weeks.  We are bombarded by quarterly earnings, GDP, employment reports, market pull backs, and the never-ending news cycle.

The list of things grabbing our attention is long.

In fact, it’s infinite.

It is easy for us to forget exactly what was going on in the market during the dates of our lifetime memories.  When we assign dates to our memories and then overlay market data on them, it becomes clear that over the long-run, snapshots are just memories, and the emotions fade, but the facts remain.

Let me show you what I mean.

I remember significant days in my life and will list some of them below:

• I was born in the middle part of 1967.
  • Dow Jones Industrial Average: roughly 880
• I started first grade in August of 1973 (8/30/73).
  • Dow: 882
• I remember seeing the armada of tall ships entering the harbor of NYC to celebrate the 200-year anniversary of our great country on July 4^th, 1976 (7/4/76).
  • Dow: 999
• I remember exactly where I was when I learned President Reagan was shot (3/30/81).
  • Dow: 992
• I remember gathering in a school assembly to see the landing of the very first space shuttle mission (4/14/81).
  • Dow: 989
• I remember exactly where I was for the Space Shuttle Challenger tragedy (1/28/86).
  • Dow: 1,556
• I remember my High School graduation in June of 1986 but can’t remember the exact date.
  • Dow: roughly 1,870
• I remember the day I graduated from college and was commissioned as a 2^nd Lieutenant in the Marine Corps (5/11/90).
  • Dow: 2,801
• I remember the first day I was ever on the wrong end of a gunfight in Mogadishu, Somalia (1/9/93).
  • Dow: 3,252
• I remember the day I got off active duty from the Marine Corps (7/1/96).
  • Dow: 5,729
• I remember my first day of my real first civilian job (8/2/99).
  • Dow: 10,645
• I remember the day I got married (10/7/00).
  • Dow: 10,596
• I remember 9/11…Like most people, I remember every detail of that entire day.
  • Dow: 9,605
• I remember the day we started Monument Wealth Management (5/24/08).
  • Dow: 12,594
• I remember the day Dean and I bought out a Partner – which we joyously celebrate every year (12/11/14).
  • Dow: 17,596
• I remember the day I retired from the Marine Corps Reserves (12/1/18).
  • Dow: 25,314

Through all the noise, recessions, long wars, short wars, a Cold War, a terrorist attack, a bursting tech bubble, a Presidential Impeachment, the market crashes of 1987, 2001, 2008 and 2010, two Level Seven nuclear disasters along with a Level Five disaster and constant political rancor, the Dow currently (on the morning of 8/6/19) sits at  about 25,700.

You will always experience days like yesterday, and you will always be heading toward a future recession.  If you have equity portfolios, you are going to lose money. It’s just going to happen and there is no way around it…you will always participate in market corrections, drawdowns, and crashes.

The most efficient and cost-effective way to buffer your portfolios against market corrections is with cash. But cash levels need to correspond with a planned short-term future use—we do not subscribe to the philosophy of raising cash out of pure nervousness.

Don’t underestimate America and don’t forget the best overall returns tend to be doled out one teaspoon at a time over a long period.

Like the Dow going from 880 to 25,700.

Keep looking forward,

Dave

We remain at MONCON 5 – DO NOT CONFUSE WEAKENING GROWTH WITH RECESSION – Slow growth is still growth.  We continue to labor to find overpowering substantiation of recession in the short term, despite the Yield Curve showing some warning signs. It’s important to remember that lead times to recession from yield curve inversions are very long and widely dispersed, making this less than useful for timing purposes.

In case you missed it, here’s yesterday’s “Off the Wall” Vlog on Dividend and Treasury Yields.

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