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This Time is Not Different

“Among the four most dangerous words in investing are ‘It’s different this time’ “

-Sir John Templeton


The primary function of financial media seems to be terrifying us out of ever achieving our financial goals by shouting about the market’s volatility.  We’ve been reminded of this almost hourly as the S&P 500 approached “official bear market territory,” defined as closing 20% below its January all-time high.


Every market decline of this magnitude has its own unique precipitating causes.  I think it’s fair to say that the current episode is a response to two issues: severe inflation, and the extent to which the economy might be driven into recession by the Federal Reserve’s somewhat belated efforts to root the inflation out.  (Russia’s war on Ukraine, supply chain issues are surely contributing to the angst, but recession vs. inflation is the main event, in my judgement.)  As the Fed moves to bring inflation under control, we should, I believe, want them to do this.  In the long run, the cure (possible recession) is not more painful than the disease (inflation).


For long-term investors, giving in to a bear market by fleeing stocks has often proven to be a tragedy, from which their retirement plans may never recover.  Our investment policy is founded on acceptance of the idea that the only way to be reasonably assured of capturing stock’s premium returns is by riding out their occasional declines.


My mission continues: not to insulate you for short-to-Intermediate-term volatility, but to mitigate your long-term regret.  The regret that has always followed a fear-driven exit when stocks resume their long-term advance.  As they always have.


Our team continues to counsel staying the course.  We are always here to talk this through with you.  Thank you for being our clients.  It is a privilege to serve you.



Bain Nickels, CKA®

Source: Historical S&P 500 Index: Yahoo Finance

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.