Photo: Dmitris Vetsikas. Source: Pixabay..
Most of us do. The rhythmic crash of waves on the shore is mesmerizing: whoosh, <pause>, whoosh, <pause>. There’s usually a little wind and a few random bird cries. But the overwhelming sound is the water advancing and retreating, over and over. There’s a good reason that ocean waves are one of the most common background sounds that people listen to when they want to relax.
There’s something comforting in the surf, in its predictable advance and retreat. It’s the steadiness that I find so comforting. There isn’t a lot of randomness, unless you visit on stormy days, or when a rogue wave appears.
Markets, on the other hand, aren’t nearly so predictable. Their advances and declines appear are unpredictable. They depend on news, rumors, corporate developments, politics, and myriad other factors. While – generally – markets advance with the underlying economy, there can be some long dry spells. The Japanese stock market still hasn’t recovered beyond the levels it reached in the late 1980s.
That’s what makes market volatility so upsetting. It can seems so random. But just because something is uncomfortable doesn’t make it wrong. In fact, in investing, it’s often just the other way around: what’s comfortable is rarely profitable, and what’s profitable is rarely comfortable.
Markets aren’t a walk on the beach. Following them is a hard, detail-oriented task that finds our weaknesses and gets under our skin. This isn’t easy. But – if it’s any consolation – it isn’t supposed to be.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”