Wars Terrorism, pandemics, inflation, government shutdowns, and questions about Gold and Silver

November 09, 2023

With over 35 years in this industry, I have observed many different historical events that have made both national and international headlines. Headlines that more often than not have created fear and volatility for stock market investors.

During times of uncertainty, especially during market corrections, the impulse “to get out just before something bad happens” and in turn, waiting to see “what happens” is innate in all of us. But it is just that, an impulse. A decision to get out of the markets is the easier half of an investment strategy. The second half’s decision of when to reinvest is a whole different animal. Why, might you ask? Waiting to see what happens can result in far worse return over the long term as compared to staying invested through the temporary decline. Very simply, the market can’t be timed. The only sure way to capture the full long-term return potential of the equity market is to be willing to fully participate in temporary declines. Riding out temporary declines, while not pleasant, is far better than missing out on 100% of the long-term upside.

In navigating these sometimes-scary headlines, it is good to remember that well-run companies attack and adjust as needed to meet the demands of a worldwide growing consumer population.

As for the gold and silver question, many companies advertise and promote the purchase of gold and or silver at various volatile times, but rarely when the economy and markets are doing well. I understand the appeal, but I am not a big fan of investing in those metals. Rather, I prefer investing in well-run established companies that produce goods or services and grow overtime with earnings that pay dividends.

While I do not agree with everything Warren Buffet says, this following quote has always resonated with me, “Gold is a way of going long on fear, and from time to time it has been a pretty good way of going long on fear. But you really must hope other people become more afraid in a year or two than they are now. If others become more afraid, you make money if you sell, if they become less afraid you lose money, but the gold itself doesn’t produce anything."

So, I leave you with this. Successful investors maintain proper long-term perspectives in all types of market conditions and cycles (with diversified well-managed portfolios). Some choose to self-direct their own investments. Many choose to work with a trusted financial advisor who is also, and more or less their behavioral coach guiding them from giving in to impulses and feelings, especially when markets are volatile. If you find yourself giving into emotions and impulses, you should find a trusted advisor.

As you enter the holidays, count your blessings, and celebrate well while keeping a balanced, long-term perspective.