Photo: Luvmybry. Source: Pixabay.
I remember biking to soccer practice. The hot August days were even hotter as we warmed up, ran drills, and scrimmaged twice a day. Life was simple: the only thing I had to remember was to bring my soccer cleats and some extra water bottles.
Later, I took my kids to their own soccer leagues. They had a blast, running up and down the field. The notion of passing the ball, working together, and teamwork was difficult to grasp. And all the kids on the team wanted a turn as goalie. We’d work on basic skills, like kicking, trapping, and passing the ball. But the point was to get some exercise, learn a few skills, and have fun.
Lately, the market has looked like a kid’s soccer game. Everyone chases the ball up and down the field. When it’s in front of one goal, no one can imagine it being anywhere else. But then someone gives the ball a powerful kick, and off they go chasing it to the other end. In the market, some of the excessive volatility is understandable for technical reason. Lots of senior traders and portfolio managers are on vacation; the junior team is less willing to make significant commitments. And so the market moves from one extreme to another, with very little time in mid-field.
There’s little point shouting “Spread out!” from the sidelines; the kids were all chasing and kicking and laughing. It’s the same with the market: yelling from off the field doesn’t do any good. The important thing is to focus your own objective, remember the fundamentals, and don’t get too scared by the big kids on the other side.
I learned a lot of important life skills playing and coaching soccer: performing under pressure, dealing with setbacks, keeping cool when things go wrong, and to keep my head the game. The markets are similar. We need to remind ourselves that if we play our own game – not the other team’s – the score should take care of itself.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”