The Gift of the Bear

Have you ever noticed how our society tends to recoil at the idea of inconvenience, struggle or hardship? We tend to grumble when things do not turn out according to plan or when situations dictate that we are in for more than we bargained. Our nature tends to hope that certain challenges don’t happen to us and yet we also feel guilty when watching them happen to someone else. ?When I was growing up, we had a neighbor that was a sort of “part-time philosopher.” One of his nuggets of “profundity,” was that “there was no greater feeling of relief than seeing cattle on the county road and then recognizing your neighbor’s brand.” IE it always feels better to not have to “own the problem or inconvenience”. Today I still chuckle about this as it applies to so many more situations.

When I think about this concept in the greater context of wealth advice, I cannot help but wonder if our focus on avoiding the inevitable is counterproductive. We can easily become fixated on making sure we avoid any form of pain at all costs. It’s as if life is somehow more meaningful if we don’t experience struggle or financial difficulty. We hear stories that are probably notionally true but factually half accurate of someone else’s financial woes and apply them to our current situation. This spiral of reality leads us to believe that random hardships can “find us” if we are not watching out for them. Next, our nature tends to assume that it is our attentive nature which shields those we love from such catastrophe. It’s exhausting!?

When I think of this, I cannot help but hear the advice of the late Charlie Munger on this topic. He once observed that the main financial setbacks in life were typically tied back to one of, or all of, the 3 L’s: Ladies, Liquor and Leverage. IE belief precedes action. And in many cases, some type of moral action typically leads to events which are truly financially catastrophic.? Compromises of belief and character typically precede the mistakes that are eventually financially measured. I can think of several that have made headlines, but I’ll spare you. The point is, when you are standing around at cocktail hour hearing of some third hand catastrophe, it is typically not just the market event that made the yarn at hand catastrophic, it is the shedding of conviction which preceded it, which made it truly horrific. Munger’s larger point is that spiritual and intellectual poverty lead to pain, no matter how much money you have! I’d like to think he is asking his audience to get upstream of the headline and focus your attention on what you can control rather than what is beyond your knowledge base etc.

Typically, average investors are tempted to think of bear markets as something to be avoided. I can think of countless times where I’ve heard someone tell me that they timed the height of the market and then proceed to explain why they felt a certain way and how that feeling led to their current prosperity. I typically smile and nod a lot when this happens. There simply are not many ways to be helpful in this context, because A: The person typically genuinely believes that they did something strategic and valuable, and B: Even if they did perfectly time their move, the temptation to gamble their feelings again, will eventually lead to pain at some point. This situation always pricks my soul. It hurts because this belief system is exactly the opposite of how we should feel and what we should believe. Bear markets are something to be embraced, not avoided. If you have planned adequately, they can often be an opportunity to strengthen your financial position. Just once I would love to overhear someone bragging about how they prepared during the bull market times, managed risk well and then when the market turned, systematically bought into the teeth of the volatility and scooped up incredible deals. But this will never happen because the person who knows enough to buy those undervalued shares, doesn’t need anyone’s affirmation. They are the quiet one, simply letting everyone else be wrong. Often these types feel a sense of humility and gratitude which prohibits them from any semblance of celebrating someone else’s misfortune.

In many other contexts preparation is viewed as its own form or reward. IE in classical education any amount of knowledge and the work associated with obtaining that knowledge is viewed as a reward. That process of viewing something correctly and of owning that perspective is its own reward. Similarly, in sports, you’ll often hear athletes say what they miss most is practice and preparation. IE hitting a game winning shot, lasts a few seconds, the process of preparing to be in that situation affords you hours of time around your best friends. In any successful situation, show me a person who despises preparation, and I’ll show you someone who may have natural ability, but who lacks the discipline necessary to possess staying power.

When we view the situations of life as preparation for right action, I would submit to you that it frees us up to be gracious about our circumstances. Furthermore, I’d also submit to you that gratitude fills up the space that fear, doubt, envy and worse yet, contempt would have otherwise filled. When we view all of life as preparation for continued investment of time, talent and financial treasure, it not only changes our perspective of situations, but I’d also submit to you that, over time, it changes us.

So why all this focus on preparation as it applies to wealth and planning etc? A lot of what ails our current investing public is the foundational belief that we can own something regardless of whether it is expensive or not and that our continued prosperity depends on that thing getting more expensive. Could it be the reason we as society want to avoid bear markets at all costs is because they reveal the painful truth that our principles are skewed? We don’t want to admit that we did not actually understand what we owned and why we owned it and whether or not it was fairly valued.

With this in mind, I would challenge you to do the preparation of writing down what you believe about investing and why you are investing. Going a step further, I would ask you to ask your advisor for their written investment philosophy as well. Some call this an investment policy statement, but, simply put, it is a written record of the truths which are guiding your investment decisions. This preparation earns you the opportunity to view market downturns as teachable moments in your family. Imagine if you could redeem those inevitable events and turn them into tales of how you prepared and proved your first principles. What if those moments that society teaches you to dread are the very things your family legacy is built upon?

I’ll leave things here for now. My hope is that rather than trying to avoid difficult circumstances you’ll simply admit they are inevitable and something which, when viewed rightly, can be their own reward.

As always, please know that I’m wishing you and your family continued Truth, Beauty and Goodness on the road ahead.

?

The Bahnsen Group is registered with Hightower Advisors, LLC, an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Securities are offered through Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

Third-party links and references are provided solely to share social, cultural and educational information. Any reference in this post to any person, or organization, or activities, products, or services related to such person or organization, or any linkages from this post to the web site of another party, do not constitute or imply the endorsement, recommendation, or favoring of The Bahnsen Group or Hightower Advisors, LLC, or any of its affiliates, employees or contractors acting on their behalf. Hightower Advisors, LLC, do not guarantee the accuracy or safety of any linked site.

Hightower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client’s individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for related questions.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.