The sky is falling is what many would have you believe at the moment.
Those who have studied Mandelbrot and Taleb know that volatility tends to cluster and that events have a memory (even in the long term). So it should be no surprise that the volatility has not yet subsided.
Rather than being scared out of the market, one ought to be looking at this through a different lens. Mr. Market is having a tantrum over many of the wrong things, and he is on sale.
Seth Klarman has said that he does not outperform despite his large cash position; rather, he outperforms because of his large cash position. It is likely for times like these that the prudent, patient investor waits to climb out of his shell and put that money that is weighing in his pocket to good work.
For wisdom from the titans, check out Warren Buffett's Op-ed from 2008 in which he outlines why he continues to buy stocks amid the downturn:
http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=0
And more recently, Howard Marks' brilliant memos have been a source of solace and insight (Warren Buffett himself claims to read them with relish every time they are released):
https://www.oaktreecapital.com/insights/howard-marks-memos
And if you glean nothing else from this post, please appreciate that volatility does not equal risk. Risk is what you stand to lose. Like Warren Buffett has stated, it is far better to earn a bumpy 15% return than a smooth 10%
Those who have studied Mandelbrot and Taleb know that volatility tends to cluster and that events have a memory (even in the long term). So it should be no surprise that the volatility has not yet subsided.
Rather than being scared out of the market, one ought to be looking at this through a different lens. Mr. Market is having a tantrum over many of the wrong things, and he is on sale.
Seth Klarman has said that he does not outperform despite his large cash position; rather, he outperforms because of his large cash position. It is likely for times like these that the prudent, patient investor waits to climb out of his shell and put that money that is weighing in his pocket to good work.
For wisdom from the titans, check out Warren Buffett's Op-ed from 2008 in which he outlines why he continues to buy stocks amid the downturn:
http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=0
And more recently, Howard Marks' brilliant memos have been a source of solace and insight (Warren Buffett himself claims to read them with relish every time they are released):
https://www.oaktreecapital.com/insights/howard-marks-memos
And if you glean nothing else from this post, please appreciate that volatility does not equal risk. Risk is what you stand to lose. Like Warren Buffett has stated, it is far better to earn a bumpy 15% return than a smooth 10%
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