We all know the phrase, “keep calm and carry on” and the numerous catchphrases that have evolved from it. We may even know a bit about the history behind the phrase, but either way, it boils down to - when you know what hits the fan, don’t freak out. So, it’s no surprise that the phrase was put on posters by the British government as they prepared their citizens for the inevitability of WWII in 1939. The poster was intended to raise the morale of the British public, threatened with widely predicted mass air attacks on major cities.1,2 And the phrase, evocative of the Victorian belief in British stoicism – the "stiff upper lip," self-discipline, fortitude, and remaining calm in adversity, may have worked. However, while 2.45 million copies were printed, and the Blitz did in fact take place, the poster was only rarely publicly displayed and was little known until a copy was rediscovered in 2000 at a bookshop in Alnwick, England.3
As I write this, the Dow Jones Industrial Average has been in a seven-week slump, its longest since 2001, and the S&P 500′s six-week losing streak is its longest since June 2011.4 I give you this quick history lesson for obvious reasons; from the pandemic to the war in Ukraine, interest rate hikes to gas prices - it can sometimes feel like armageddon out there. Throw my favorite punching bag - the media - in the mix and we’ll all believe we are on the brink of extinction. That is why I am here to say, with confidence, keep calm and carry on.
In this month’s Edu-Blog series, I will be making the case for doing nothing. You heard me right, doing nothing. Now, I don’t mean you should sit on your couch, binge Netflix, and eat whatever you want while the world goes on around you. What I do mean, is that history shows us that at times like these, it can be more detrimental to do “something” with your investments than to do nothing.
In case you don’t believe me, just ask Warren Buffett. While many folks are panicking about what to do in such a tumultuous market, Warren Buffett has said the answer is simple: Try not to worry too much about it.5 The Oracle of Omaha added that investors who buy “good companies” over time will see results 10, 20, and 30 years down the road. “If they’re trying to buy and sell stocks, they’re not going to have very good results,” he said. “The money is made in investing by owning good companies for long periods of time. That’s what people should do with stocks.”5
I couldn’t agree more, it’s that simple. This month we will look at what history shows us and why we should listen. Remember another little catchphrase here - history tends to repeat itself. While we aren’t using it as a crystal ball, history can certainly show us how the markets have behaved in similar situations in the past and where we were economically at that time.
So, without getting carried away and telling you all the good stuff swirling in my head at once - I’ll leave you with this. Like Buffett, the late legendary investor Jack Bogle also recommended a buy-and-hold strategy. He has said that buying stocks and holding them was the best way to invest because “your emotions will defeat you totally” if you try to sell your holdings to avoid losses and get back in afterward.6 “Stay the course,” Bogle said in 2018. “Don’t let these changes in the market, even the big ones [like the financial crisis] … change your mind and never, never, never be in or out of the market. Always be in at a certain level.”6
Next week, we will start getting into the specifics behind this philosophy, but until then - DON’T DO A THING with your investments.
Until next time…
One last thought, I believe an educated investor is an empowered investor. If you like what you’ve read and think your friends and family can benefit as well, please share.
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.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
2 Lewis, Rebecca, PhD (5 April 2009). "1939: The Three Posters (PhD Extract)". Keep Calm and Carry on and other Second World War Posters: British Home Front Propaganda Posters of the Second World War. Archived from the original on 2 April 2015. Retrieved 19 May 2022.
3 Jack, Malcolm (20 April 2020). "How we made the Keep Calm and Carry On poster". The Guardian. Retrieved 1 April 2022.
4 Min, Sarah. (15 May 2022). “S&P 500 falls as market struggles to recover from multiple weeks of losses, Nasdaq down more than 1%.” CNBC. Retrieved 19 May 2022.
5 Vega, Nicholas,(17 May 2022). “Warren Buffett, Jack Bogle and financial planners agree: When stocks are down, 'don't watch the market closely'” NBC News. Retrieved 19 May 2022.