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  • March 3, 2020
  • Chuck Osborne


“If you can keep your head when all about you / Are losing theirs…”
~Rudyard Kipling 

Rudyard Kipling’s poem “If” is one of my all-time favorites. It certainly was appropriate last week as the market dropped amid coronavirus fears, and may still be needed yet. I hope the Insight we sent out last week helped calm our clients. I know we received few client calls last week, and the ones we did field were not panicked in the least. I believe that is a good thing, and I hope we play at least some role in that confidence.

For my part, the confidence comes from experience. As Mark Twain supposedly said, “History does not repeat itself, but it often rhymes.” We have been through this before; not only myself, but the entire Iron Capital team. Experience matters.

As most of our regular readers know, I coach youth basketball. This past season I had an inexperienced team. The third game of the season we met a team that pressed full-court. For the non-basketball readers, that means they extended their defense all the way up the court and tried to double-team the player with the ball. It is risky because the defense was leaving one of our players open, but it can cause confusion and panic, which is exactly what it did that game.

The next week we played game number four against yet another pressing defense. Our boys kept their poise and handled the press beautifully. We won in a blowout. One of the parents came up to me after the game and asked what the difference was? I responded with one word: experience. They realized that is was not the press that had beaten them the week before, it was their panic that had beaten them.

Sports teach such great life lessons. In life, it isn’t what happens to us that matters nearly as much as how we choose to react to what happens to us. Later in his poem, Kipling tells us, “If you can meet with Triumph and Disaster / And treat those two imposters just the same….” We live in a world of over-reaction, hyperbole, sensationalism, or whatever one wishes to call it. A team wins a championship and they are immediately called the greatest ever. We get a blip on the economic landscape and we are heading for recession. This is human nature, and as Kipling so wonderfully put it, these exaggerations are “imposters.”

Corrections in the stock market are painful but necessary. The unfortunate fact that they seem to happen at the speed of light these days does not change the long-term truth. One of the ways of dealing with these unfortunate events is to not let any value become anchored in your mind. This is one of the classic psychological traps investors fall into: They pick a value for their portfolio and that is the value. Gains and losses are measured from that point. If that point was the all-time high we hit just a few weeks ago, then a stock portfolio is down close to 13 percent. If that value was a year ago, then stocks are still up considerably. One has to understand that those random days are imposters. The value will change and keep on changing.

Over the long haul, that change is upward, but it never grows in a straight line. All one can do is to make prudent decisions and then have some faith. No matter the crisis, keep one’s head. Understand that both triumph and disaster are but fleeting moments, and finally follow Kipling’s last instruction.

“If you can fill the unforgiving minute / With sixty seconds’ worth of distance run, / Yours is the Earth and everything that’s in it, / And – which is more – you’ll be an Adult, my child!” Okay, I degendered that last line, but how much better would our world be if we had a few more adults today?  At least that is my perspective.

Warm regards,

Chuck Osborne, CFA
Managing Director