Asset accumulators stand to gain the most from market selloffs.

Recently, the markets have been volatile. Multiple factors seem to be contributing to the turbulence. Here are a few things that seem to be impacting the market in the short term: the election, a Yen carry trade unwinding, and a subpar jobs report.

The market is constantly digesting the changing environment. Now and then, the market will get super irrational. Irrational can go both ways, we have seen markets get irrational to the upside and the downside. As the famous Benjamin Graham stated in his book, The Intelligent Investor, the market is prone to erratic movements in price from mania to depression.

The market is full of emotions as of late. I have written probably 10 times throughout different newsletters that emotions do not have any place in a portfolio. Emotions can lead us to act irrationally. This is not something we are interested in as long-term investors. But I promise, the market will try its absolute best to get you to act emotionally throughout your investment career.

To put it in Warren Buffett’s words, “The stock market is the only place people run out of when items go on sale.” This has to be one of the most accurate quotes of all time. When stocks are down, people don’t want to touch them with a 10-foot pole. However, this is usually the best time to be adding to your portfolio.

When it comes to being a young asset accumulator, as counterintuitive as it sounds, you should almost be begging for depressed prices. The reason is that they can be absolute jet fuel over the long term.

2008 was a scary time. We can all agree on that, whether you fully grasped what was going on at the time or if you’ve reflected and realized the magnitude of the situation, it was a frightful event. Putting your money to work and investing then was probably one of the hardest things to do. But to put it in perspective, let’s take a look at what some well-known stocks were trading at back then (most of these are split adjusted prices):

On December 12, 2008, Apple traded at $3.51. Currently, it trades at $205.

On December 19, 2008, Microsoft traded at $19.12. Currently, it trades at $402.

On December 19, 2008, Nvidia traded at $.21. Currently, it trades at $104.

On December 19, 2008, the SPDR S&P 500 ETF traded at $88. Currently, it trades at $524.

If someone gave you the opportunity to purchase any of those stocks at their 2008 prices today, you would be putting every last dollar you had into them.

The S&P 500 is up nearly 500% from December 19, 2008. And I promise, that back then the financial media was having an absolute field day. The sky had literally fallen for financial markets. Yet, when we look back, it appears to have been a generational buying opportunity.

I always make the joke that any price today will look like a strategic entry point in 30 years. Usually, I accompany the statement with this meme:

Market selloffs suck in the short term. It is not fun to watch your investments erode from where they once were. But take comfort in the fact that you have 20-30-40 YEARS to accumulate assets.

As Morgan Housel, the author of The Psychology of Money would say, “All past declines look like an opportunity, all future declines look like a risk.”

This is true in every instance. In recent history, think of 2020 and 2022. Man, would I love to go back to 2020 and buy some stocks when the market fell apart as COVID began.

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Have a more specific question or want to get your finances in order? Feel free to reach out to [email protected] for a free consultation!