Volatility!

It’s easy to talk about and intellectually understand that it is part of investing, but volatility is so much harder to live through. It is simply no fun seeing asset values decline! And even less fun to see entire portfolio values retreat. However, if you turn it around, knowing others are experiencing the same and possibly being panicked out of good long-term positions, then the opportunity side of volatility comes into focus. We are going through such a period now. In fact, expect plenty more this year.

Since periodic bouts of volatility are a given, prepare for it. Keep necessary cash needs separate from your long-term assets so you do not have to sell something during downturns. Keep a target list for assets you would like to add or add to. Do the research in advance so you are prepared. The Bull and his partners do this regularly.

Buying low implies that there are periods when good, even great, assets are cheap. They are usually cheap because someone else fears something about them, or they are fearful of the environment, or perhaps they need cash. These are usually short-term issues and do not impact the real value of a good company. Downtrends create fear and fear begets fear. People being people, they are influenced by others so a trend can gather momentum. We all know that the long-term history of returns in the stock market have been fabulous, but often, some lose sight of that. Keep focused on your goals, buy upon good opportunities, and stay steady my friends!

The Lonely Bull