Change your thinking

Crisis. We currently have a market crash on our hands. The COVID-19 virus is causing havoc. Panic en-masse. And panic leads to extreme results when it comes to the markets.

You will experience a number of market crashes in your lifetime. Market crashes will continue occurring throughout your lifetime. And those of your children. And your children’s children. These are part of the natural greed & fear cycle.

No one has a crystal ball. The timing of these crises is impossible to predict with accuracy. The only certainty is that they will occur. Even if you spot the next crisis, “markets can stay irrational longer than you can stay solvent” (Keynes). So make peace with the fact that you nor your advisor will be able to time the next crisis.

Markets recover. The human race will recover. Companies profits will recover. Markets will recover. Hold on. Again the timing of the recovery is impossible to predict. But recovery will come. Hold on.

Change your thinking. Do not measure your wealth in terms of the daily gains and losses from the market. This thinking will cause you to panic and act foolishly. Change your thinking to an ownership principled one. You own the companies you invest in. You are part business owner of great businesses such as Naspers, Apple etc. As the owner of Apple, you are entitled to all future dividends which are paid from profits. In the short-term, yes the COVID-19 virus will likely cause less people to buy Apple products. And next year’s dividend might even be somewhat lower. But the human race will endure and so will your future dividends. Hold on.