What I wish I could share with people during bear markets…
If you think your life is about your money, you’re in for a rough time. You’ll be too attached to your money and will rely on it for too much of your self. It’s a practical necessity, I get that. But it’s too narrow of a lens.
Suppose you rely on your money for your sense of security. If you have a market decline of 50%, does that mean you are half as secure as you were before? Maybe. It certainly seems that way if you have made money your primary pursuit and used money as the primary source of your security. But is it the ultimate source? Should it be? Can money ever provide total security?
No.
For starters, your wealth is only as good as your society’s commitment to honoring and protecting your assets. If we were to devolve into anarchy, your “property” shrinks down to whatever you can defend with force. Conversely, with a tyrannical government, your ownership is only good up to the point where the government decides it needs your wealth more than you do. Your wealth can easily be seized, commandeered, or frozen.
Try though you might, such massive societal shifts are probably beyond your ability to prevent. And even if they do happen, you’re still left with the same question as always, “what do I do with my life, today?” That would be very hard, even traumatic to live through and adapt to, but it either happens or it doesn’t.
But let’s set aside the big picture for a moment. What about a more mundane but far more common scenario, like a life-threatening illness. There are several forms of cancer that no amount of money can cure. What good does your money do you then? Again, money proves insufficient for helping you cope with life. And even if you aren’t afflicted with a disease, you will still die anyway. Money does not solve this problem, nor does it provide a clear answer to the question of what to do with your finite existence. “What do I do with my life, today?”
What I’m getting at is this: Money is not the “Ultimate Source.” It doesn’t define your being. That’s between you and the universe.
Whether the market is up 50% or down 50%, your fundamental relationship to the universe remains essentially the same. You are very small and relatively powerless, and the universe is very, very, vast. You inhabit a reality that is beyond your comprehension. But despite those conditions of extreme uncertainty and unknowability, you must still live, exist, and take action. Money does not provide an ultimate answer to those questions.
I think if you’re looking for a deeper, more durable source of security, it will have more to do with your fundamental stance towards the universe than with the amount of power you can exercise within it. “The Lord giveth and the Lord taketh away…” Indeed, you can try to fight or outwit God (or the universe, or whatever you call the vastness beyond human comprehension), but good luck with that. I think a sane attitude to take is one of cooperation and connection with that infinitude. “Yes God, the market is down 50%. I trust you. I trust that I will be ok. I surrender my will to yours and will look for the opportunities you are giving me to grow in my faith and connection.”
There’s a big difference between that attitude, and checking the market multiple times a day, and calling your financial advisor worrying about whether or not it will come back up, or whether we’re on the brink of civilizational collapse. Sure, have faith that the market has almost always come back. But have faith too in something beyond the market, beyond society, and beyond your government. Because these are fallible institutions, created by man. They can fail. If you want something to place your ultimate trust in, you need something that transcends these systems.
This is why I believe so deeply in the power of spirituality (whatever flavor works for you). Even if your external life really becomes more and more chaotic and unmanageable, you can still grow your internal sense of peace and well-being. How odd! How counterintuitive! You can learn to find joy in the mundane moments of daily life, learn to laugh more, learn to be a better friend, learn to treat others with kindness and patience instead of righteous anger. You can continue growing even as the world crumbles all around you. You can be a source of the very peace that you once thought depended on your money. You can be a light for others in the darkness.
And yet, this is a tough pill to swallow for some people. Sometimes people come to me and want to know that everything will absolutely be ok no matter what. That’s not a promise I can make them. I can illustrate that, under normal conditions, they will most likely be fine. I can say, “historically, it almost always works out fine.” But life isn’t normal. Life is weird, unpredictable, and mysterious.
People want certainty from markets, but the only certainty lies in the past. We can say with complete confidence what markets have done before. But in my opinion, the future has less to do with “historic averages,” “valuation ratios,” and “economic indicators” than it does with faith. If everything goes smoothly, that looks like faith in the US economy, the dollar, government, or corporations. But of course, not everything goes smoothly all of the time. Every great economy fails at some point. As does every great empire, every great corporation. And every great currency too. In fact, currencies are almost guaranteed to become worthless over time, given the tendency of governments to overspend.
So it’s okay to have some faith in institutions, but make sure it isn’t an “ultimate faith.” I like to think of stock investing as an exercise in conditional faith. “As long as the world doesn’t end, this is the investment approach that will best grow and preserve my wealth, despite headwinds from inflation, recessions, etc… And if it does end, well then I’ll deal with that separately.”
This might sound a bit lame, but there’s a big difference between starting over with nothing, and starting over when you have a spiritual relationship to the universe. Just having some sense of connection, of how to conduct yourself, how to make sense of the world. A person’s sense of self can be completely shattered by relatively normal life events (let alone the apocalypse). Trauma, another person’s addictions, self-destruction, heartbreak, divorce…. I’ve been through my own shattering of self. And it wasn’t until I developed that deeper spirituality that I really started to heal and learn to move through it. Starting with that spiritual relationship makes a really big difference. You can lose the world, but regain yourself. That’s an ok outcome. Losing the world and yourself, because your self is tied up in your worldly status… That’s rough. It’s also preventable.