“It would be silly to expect every bear market to turn into the Great Depression. It would be equally wrong to expect that a fall from overvalued, to more fairly valued, couldn’t badly overshoot on the downside. “– Seth Klarman, American Billionaire Investor.
A.G. Campbell Advisory is taking this opportunity to reach out to our clients and offer some reassurance that the negative price action that we are experiencing in the stock market doesn’t last forever. Actually, bear markets are normal, and happen on average every 3 ½ years. After 5 years of up markets, many have seemed to forget that a bear market or recession is even a possibility. YOU SHOULD NOT FEEL SIGNIFICANT FEAR OR WORRY because this type of market is simply part of the economic cycle. We suggest that our clients view a bear market as a normal and necessary market condition that will come and go. We don’t enjoy this feeling of uncertainty, but it’s always there, even at the height of a bull market.
The key to being a successful and profitable investor is to hold onto your great companies. Don’t be like the sheeple and head for the doors at such low prices. No one has ever been able to successfully time the markets; so, why would now be any different? Instead, we would take this time to look at the other side: what are the companies I have always wanted to own, including at the top of a bull market, and what sale price am I willing to pay? What is that company “really” worth in today’s economy? These questions will help you make wise decisions to buy at low prices, rather than the reverse mis action.
Last thing, bear markets can give us an opportunity to weed our portfolio. We can add to our winners at lower prices and discard the losers. This reminds me of how my mother used to prune her garden. It’s wise, necessary, and keeps everything looking beautiful and running well.
I hope this helps you in this understandably difficult time. If you need to speak with any of us, please don’t hesitate to call, and we are happy to serve you in any way possible.