It’s been a bad week for the stock market and that got me thinking.
I’ve had some bad weeks before too.
In classic Joe fashion, I see the recent changes in the stock market as a perfect opportunity to draw a parallel to life. The worries that seem to be consuming the world and affecting finances are not too different than the worries that, at one point or another, consume us all. There’s no such thing as a perfect analogy, and this is no exception. I would encourage you to read this article with an open mind and take this comparison for what it is, a vehicle to talk about something more important than the stock market; life.
Life is a lot like the stock market.
This blog is not meant as financial guidance. The purpose of this blog is to provide encouragement in the midst of a week painted red and to bullishly bring hope to someone who feels like their life is trending down.
If you read nothing more of this blog, read the next paragraph and if I can’t convince you to read on, then at the least, I can say that I tried.
We all have “bad days,” however, those bad days don’t define us. What defines us is what we do in response to those difficult days. What defines us is what we do day-in and day-out. What defines us is our action over time. So no matter what happens this week. No matter how bad of a day you might have had. No matter what external circumstances that you’re dealing with. Keep moving forward, continue to invest in yourself, trust in the process, accumulate “good days” and trend up over time.
I’ve been invested in the stock market for well over a decade, but, this blog isn’t about money. Rather, this blog is focused on the foundation of faith, the concept of consistency and how both are imperative to success in the stock market and in life. The more that I think about it, the more that we as humans have in common with the stock market as whole. We all have ups and downs and it’s natural to go through seasons in life where we prosper and seasons of life where we struggle. Much like the stock market, those seasons, when viewed in isolation, don’t paint the whole picture. I’m going to use the rest of our time to take classic investing advice and relate it to a bigger picture in the hopes that you can take practical value away from my words as it applies to your life. Without further ado, let’s get started.
Keep It Simple
When it comes to investing, like everything else, some of the best advice that I’ve ever come across is to spend time being great at the fundamentals. If you can understand the basics and do them well, the rest will come. I’ve had enough investing experience to tell you that this claim holds true, but I’ve had even more life experience to support that this advice transcends stocks. The most beneficial and admirable things in this world seldom attract attention or praise.
“Beware the investment activity that produces applause; the great moves are usually greeted by yawns.” Warren Buffett
In life, the most successful people are the ones who can do the little things well over and over and over again when nobody is watching. The best people in the world are the ones who can battle boredom with purpose and do the monotonous things day in and day out without the need for attention. In the stock market or in life, if you want to do great things, you have to be able to do the small things well on a consistent basis and trust that it will all come together down the road. This approach is not glamorous, but anybody who has achieved some level of success will tell you that it is effective.
“Greatness is a lot of small things done well.” Eric Thomas
No Risk, No Reward
In an attempt to help me dip my toes into investing without the risk, my dad assured me that he would back all losses in the first year of investing. I’m extremely grateful for that offer because without it, I would still have my money sitting in the bank it was where was safe. This is where the stock market taught me it’s first lesson; in order to gain, you have to risk.
“A man would do nothing, if he waited until he could do it so well that no one would find fault with what he has done.” Cardinal Newman
Unfortunately, at age 25, my dad no longer backs my losses (any takers?). However, he (and my mom) continues to push me to take risk in all areas of life. Just a few years ago, I contemplated dropping out of graduate school before it even started due to concerns with my eyesight. Through countless conversations and endless tears, my parents convinced me to pursue what I wanted despite the “what ifs” that life had handed me. It’s now almost four years later, I have my Doctorate degree and I can say that taking the risk to go to graduate school has been the best decision of my life, hands down. If you’d like to hear why that’s been the case, I’d love for you to read it here.
“Life is inherently risky. There is only one big risk you should avoid at all costs, and that is the risk of doing nothing.” Denis Waitley
It’s A Long Game
One of the strongest connections that I see between the stock market and life is the relationship between short term struggle and long term outcomes.
Let me explain.
“Someone is sitting in the shade today because someone planted a tree a long time ago.” Warren Buffett
The stock market had a terrible week, but if we take a step back from this short term struggle, it’s easy to see that framed in the right perspective, this is long term opportunity. Much like the market vacillates, so does life. Each of us, in God’s perfect timing, walk through seasons of struggle and face times of doubt. In my first 25 years on this earth, I can tell you that I’ve had multiple stretches where hope seemed to elude me and darkness was all that I thought I would ever know. I’m not alone in that and neither are you. Like the stock market, we all have seasons where worries consume us and life feels as if it’s trending down. It’s human to feel that way. However, those bad days don’t define you and it’s if you can take the next sentence to heart, it will transform your life. If you choose to see it this way, struggle is the stimulus for strength and adversity is the opportunity for growth.
Buy Low, Sell High
This is where the connection between the stock market and life both hits its peak and begins to break down. When the market dips, resist the urge to jump ship. Control your emotions and trust the fact that over time, the market will come back better than before; it always has. In times where the market trends down, continue to invest; buy low. On a similar note, when life feels like it’s dipping, stay the course. Take a step back and realize that you’ve made it through every single tough day that you’ve ever had. Continue to invest in yourself when you feel that you’re losing value and have faith that in time, you too will bounce back stronger than ever before. Because you will.
When the market dips, fear is the instinct and selling feels safe. When life dips, inaction is the urge and pity is the pitfall. Just like money invested at a low point in the market yields greater returns, effort (and energy) invested on the hard days of life results in the greatest growth. It’s all about having a long term vision, sticking to the plan, trusting the process and putting in the work especially when it feels hard, unappealing and uncomfortable.
“Sometimes when you’re in a dark place you think you’ve been buried, but you’ve actually been planted.” Christine Caine
This is where the parallel breaks down. When the market is going well, you can’t go wrong taking a profit. In other words, sell high. However, in life, you can’t sell high because you are the market. You’re stuck with yourself and that’s a good thing. When your life is trending up, don’t sell. Instead, continue to invest in yourself and invest in those around you. In the seasons of life where everything seems to be going in your direction, use it to lift others up and invest in the world around you. There is no greater investment that investing in yourself and investing in other human beings.
You Can’t Time It
To build off of the previous point (buy low, sell high), you can’t time the market and you definitely can’t time life. In an ideal world, you would only buy stocks at their lowest and sell them at their highest, but it doesn’t work like that. The variables are far too numerous and the interactions far too complex to act in perfect timing. With investing, there is too much that is out of our control and with life, there is even more. However, what we can control is our response to what life throws at us.
“Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.” Viktor Frankl
There is no telling what might happen from one minute to the next. The hands we are dealt are out of our hands, but that’s not what matters, because we can’t control those things. In the stock market and in life, success depends on how we control what we can control. The market, like life, vacillates. It has ups and downs and so much in between. In the market, it makes sense to plan ahead and have strategies in place to deal with the uncontrollable. In life, it makes sense to create systems and build habits that transcend external circumstance. In other words, if you want to be able to handle the unexpected with poise, you need to start building good habits right now. Habits are one of the hardest things to intentionally create but also one of the most powerful things that we could ever invest in.
“Chains of habit are too light to be felt until they are too heavy to be broken.” Warren Buffett
Price Is Not Value
This is one of the most concrete yet elusive concepts that I’ve ever come across. In regard to the stock market, I still don’t understand how stocks are priced because to me, value is so subjective. Because I don’t understand it, I’m not going to talk about it. Instead, I’m going to leave you with these words and then talk about what value means to me.
“The stock market is filled with individuals who know the price of everything but the value of nothing.” Phil Fisher
To me, the word value makes me think about what I add to this world. The concept of adding value drives me to leave this world better than I found it in everything that I do. I believe that it’s hard to put a price on value because it’s subjective to the individual who contemplates it. To me, adding value means leaving someone better off for having known me. I would encourage you to stop chasing price and start chasing value, both in terms of what you get and in terms of what you give. The more value you can add, the better off this world will be. Price is influenced to a large extent through external circumstances (e.g. supply, demand, coronavirus, etc.), but value is created within.
“Price is what you pay. Value is what you get.” Warren Buffett
There is so much more that I could talk about when it comes to the stock market and it’s similarities to life, however, I’ll sum it up hear. The great Warren Buffett said it himself, it’s not rocket science.
Whether it’s investing in the stock market or being the best version of yourself, at it’s core, it’s simple. It’s about being intentional, being persistent and being patient. It’s about building good habits now, being consistent always and doing the little things well over and over and over again even when there is no immediate reward. It’s about taking calculated risk, trusting the process and putting in the work with the understanding that what you put in is what you get out.
The stock market will bounce back.
If you’re in a tough season of life, you will bounce back too.
If you feel down, alone or in need of support, whether I know you or not, I am here for you. I would love to extend my arm and help pull up and I mean that with all of my heart. If you don’t believe me, here’s my number. Send me a message: 908-301-6581.
“This too shall pass”
Thank you for taking the time to read.
I appreciate you.
Joe Rinaldi, PT, DPT