OOOFFF!
By: James C. Denton, CFP®, Retired, Founder
April 5, 2025
What a week for the markets … in terms of sheer drop in value versus the time it took to happen, this is probably the worst week in my experience as a manager or investor. I’ve lived through, most significantly, the crash of 2000 – 02, and the banking and insurance crisis of 2008-09 and several other less destructive short-term disruptions, all the way back to the “end of the world”[1] one week event of 1987, so I have some pretty thick calluses but my own gut response to this week, in the context of this experience base gives me an appreciation of what some of you are probably going through right now.
So a bit of perspective. I know you feel like you have “lost” 15% or more of “your money” but this is not an accurate take away. In fact, you still own the same percentage of the same great American companies that you did a month ago when the market was at an all time high and you were feeling wealthy. You are still entitled to the same proportion of the earnings and future growth of these companies as you were last week. And to every single investor in our care … You still have more money than you had when you came to us and almost certainly, more money than you would have had if you had never invested in the first place.
Such is the long-term reality of investing. The reason why we do it. The market has good days and the market has bad days and the market goes up[2]. Proof … we hit record all time highs on a significant majority of American companies in the past 52 weeks, and on all three of the major market indices, since the beginning of 2025.
This has happened before, most of you have been through it to one degree or another, and it, no doubt, will happen again. But, This, too, Shall Pass! The market has always come back and there is absolutely no reason to expect it will not this time. In the meanwhile, over-reacting now is not the best way to “preserve gains”. Selling now, rather, will expose you to paying capital gains taxes on the realized gains you would be “preserving” by selling, and keeps you from participating in the recovery which inevitably will come.
A reasonable question would be, “Jim, what are you doing?” I’m glad you asked. This week I committed a significant amount of cash holdings to companies I had wanted to own for a while, but which I considered to be too expensive. They aren’t right now, so what looks like a catastrophe, for me was an opportunity. Perhaps it is for you as well.
I cannot address the underlying reasons behind this artificial event (and in my opinion, it really is artificial, there is no underlying economic justification) without getting political and it wouldn’t be productive in any event to do that here. But the politics are the reason, and there are very knowledgeable and experienced people on both sides of all of the issues. So, whatever my personal views, with which you may agree or disagree, in the end, there is room for all of us to be wrong[3]. I will neither elucidate nor editorialize on the politics but I am happy to elaborate on the economics if anyone is interested in a one-on-one discussion. For the purposes of this limited discussion, as difficult as it may seem in the moment, in the grander scheme of your 20 to 60 year plan, it just ain’t that big of a deal.
I sometimes get laughed at for what seems to have become my mantra … “STICK TO THE PLAN”. I’ve wracked my brain trying to find another way to communicate the same idea. But the “plan” has worked, and evidently so has the mantra. Anyone who is taking the time to read this article has probably followed this advice so far, a month ago you were glad you had, and in the not so distant future you will almost certainly be once again. Hang in there.
[1] Speaking hyperbolically
[2] History “doesn’t repeat itself, but it usually rhymes”, we can’t “guarantee” future results, but this has happened many times before, and EVERY SINGLE TIME, we have recovered, and EVERY SINGLE TIME, those who have withdrawn have missed out.
[3] Credit to Dr D. James Kennedy
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