Are We Still OK?

May 25, 2022

By:  Ellis Miller, JD, Advisor


The stock markets are in a funk. It seems like every few days we see headlines saying it’s the worst day/week/month since some long ago date. Fear is controlling many investors, and they are stampeding toward the same exit door, possibly creating a bear market. It is popular to forecast a recession, and markets have priced one in.


Should we be ruled by that fear? Warren Buffet, a great investor, says we should go counter to the prevailing moods. We should invest when fear rules. And he is buying while others are selling.


Here is why: He knows bargains when he sees them. Businesses are more profitable than ever, in spite of labor shortages, supply chain difficulties, interest rate hikes, and inflation. They currently have great earnings while their share prices have dropped, which is rare.


Doesn’t he care if a position keeps dropping even after he buys it? In a word, “No.” He is an investor, not a trader. He is an owner of top quality businesses and he acts like it (And, as an aside, this is usually what we see in Pleasant Wealth clients).


So our message is to invest well and stick to it through thick or thin. We’ve had many recessions and bear markets before, and 100% of them had a recovery immediately afterward, which always surprises the fearful. Remember, it’s usually better to be hopeful than to be fearful.