The Time is Now

Be greedy when others are fearful

— Warren Buffett

Many successful people in the world credit their success to being in the right place at the right time. Warren Buffett is one of them. He calls it winning the ‘ovarian lottery’:

“When we (referring to himself and Charlie Munger, his partner) were born, the odds were over 30-to-1 to being born in the United States.

Just winning that portion of the lottery, enormous plus!
We also won it in an era in which we were born male. We won it by being white. You know, no tribute to us, it just happened that way.

And we won it too by being wired in a certain way, which we had nothing to do with, that happens to enable us to be good at valuing businesses.

And you know, is that the greatest talent in the world?
No. It just happens to be something that pays off like crazy in this system.”

While we may not have the financial smarts like Warren Buffet and Charlie Munger, there are times in the markets where we have the opportunity to do something that could “pay off like crazy” in the future.

Right now we are seeing a market sell off around -22.8% (at the time of writing) in global equity markets. Global bond markets are also down by close to the same amount (which does not happen often). The official definition of a bear market is when markets are down -20% or more. It does not happen as often as one might think. 3 out of 10 years are negative years, but bear markets (>20% down) occur even less often.

So herein lies the opportunity.

Source: Dimensional Fund Advisors

The bar chart above with a long history of 95 years, shows that investing during market declines of 10, 20 and 30%, has fantastic forward returns (chart shows the average returns for the next 1, 3 and 5 years for global equity markets).

Everyone talks about investing when markets are down but only a few ever do it. So if you missed the market sell-off during the 2018 Trump trade war or the 2020 COVID-19 bear market, then your next opportunity is here!

Unless you believe that capitalism is coming to an end, or there will be a global thermonuclear war tomorrow, markets will continue to function. Economies will grow, and well run companies will continue to make money. Investing means that you will continue to participate in the rise of human innovation and growth. Investing also means that you assume some risk (and volatility) for the chance to make your money grow. And the rewards for assuming that risk are that you achieve your financial goals and help preserve your future purchasing power against the onslaught of inflation.

Source: GYC, Global Stock Data from MSCI World Index. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.

The news always seems to portray that a bear market is right round the corner. But the truth is that bear markets or large market sell-offs are short and not that often, as the chart above shows. And more importantly, the chart also shows the meteoric rise of global stocks after a large sell-off, rewarding you with long-term gains.

So the question is what are you going to do about all this information? Some of you may be seeing this as a gamble, or asking if you could lose all of your money. If you were to invest in a few specific stocks, then the risk of losing that money would be high. But what if you were to invest in the largest 10,000 stocks in the world which is offering you a discount of over 20% right now?

In fact, can you afford to miss out on this window of opportunity? After all, investing when the market is down, means that your expected returns would be even more rewarding.

It is true that global stock prices could still go down a bit more from here. While we cannot predict market bottoms, the current low prices means that stocks had already dropped significantly. Investing in a globally diversified portfolio with thousands of holdings, means that you are buying good companies at a great discount with very little company-specific risk.

If you do not want to miss out on this current market dislocation, or want to find out more with regards to your personal financial situation, come speak with us.

The time is now!