Is this time different?

In the book, “Just Keep Buying” by Nick Maggiulli, the first chapter begins with a statement: “Why saving is for the poor and investing is for the rich.” It’s an interesting declaration. I grew up in a family of savers, for the most part. Three of my four grandparents were teachers of some variety or another who retired on Pensions rather than 401(k) plans. My parents were law enforcement officers or consultants of one form or another. The entire college savings my family built up for me was done with Series EE savings bonds, which yielded a little less than inflation throughout the term of their investment. When I’ve spoken with family members, they’ve said things like: “Money just stresses me out, I don’t like to think about it.”

And it’s a funny thing, this generational focus on saving rather than investing. I can sum up the deliberate financial lessons of my childhood as being a single page chart showing the classic “Alice invests from 20 to 35 and John invests from 35-60 and John never catches up with Alice” example, and my father buying me a copy of “Rich Dad Poor Dad” of which I read through about one and a half chapters in middle school before abandoning it to read “Holes” for the 76^th time. There were plenty of other lessons, mind you, just not ones that really stood out or made much of a memorable impact.

But why am I talking about saving instead of investing? The title of this blog invokes Sir John Templeton’s famous: “The four most dangerous words in investing are ‘this time it’s different.’” That’s the question I’ve gotten the most over the past few days. “Surely this tariff thing is unprecedented. We’ve never had a malignant narcissist like this president in office. No one has ever flouted the rule of law so flagrantly. Surely, this time is different!” And if I took the word of the thousand or so people protesting on Main Street and around the country on Saturday, I might be inclined to say this time is different.

Might be.

The problem is, I’m a student of history, and I get the unusual fortune of having a sample size with an n greater than 1. The funny thing is that people have short memories. For example, in 2018, the exact same tariff thing was happening (albeit a bit smaller in scale). Someone like the malignant narcissist in office then is in office now; in fact, it’s the same malignant narcissist. And that same person flouted the rule of law just as flagrantly as they are now. So what happened in 2018? Well, in Q4 the S&P 500 sank 13.97% in Q4 before rebounding to a gain of 10.87% by the end of 2019.

But I know I said my unusual fortune is having a sample size greater than 1 to draw from, and a single historical instance is just that. So what did I mean? I’m a student of history, but history is both written and oral. We pass down information in reports, documents, books, and films. But we also have lived experiences. I’ve had the privilege of working with people who lost money going all the way back to Stagflation. Events such as the OPEC Oil Crisis, Black Monday, the Dot Com bubble, 9/11, the Invasion of Iraq, the Great Recession, Brexit, the Trade War in 2018, the COVID Crash in 2020, the interest rate raises of 2022. I’ve worked with hundreds, I’ve spoken with thousands.

The story may be different, case to case, person to person, experience to experience, but the Hero’s Journey is ever the same. “I was doing fine until [event] happened, I panicked, and I’ve never recovered.” I’ve talked to people who lost 90% of their savings in the Dot Com bubble; lost their jobs, house, and 401(k) in the great recession; even people who simply went to cash during COVID who’ve since missed out on almost doubling their money. It’s not saving that hurts you, or even not saving enough that hurts you. It’s failing to stay invested despite times getting tough.

I was taught something in the Army in basic at Fort Benning: “Hearing gunfire is good. Rounds snapping past you is good. Because if you can hear it, you’re still alive, so keep fighting.” Those are words spoken by then Drill Sergeant and then SFC Billy Siercks. He since was killed in action in Afghanistan in 2011 on his 3^rd combat tour, as a 1SG, leading his men in battle. I do not doubt that, despite the danger, someone like 1SG Siercks would to this day much prefer to have the privilege of hearing the gunfire than the silence.

At the top of the blog, I invoked the quote: “Why saving is for the poor and investing is for the rich.” What followed is my story and the story of my family: One of saving and not investing. Yet, today I invest. I invest for myself, for my family, for my clients, and for my community. I tell my clients, friends, and colleagues to be invested and stay invested regardless of the conditions. Regardless of the storm, the noise, and the danger. Because, as with going to war, investing is an act of faith. It is a fundamental belief that you and yours will be better off by delaying the gratification of spending or the safety of saving and avoiding the risks of the market. Yet that faith in investing is its own reward: You put money in, and you have money to lose. You have already decided not to squander it today, so optimism is the only rational way to think about it, or why would you have bothered?

That’s not to say you can’t lose money, or have bad timing, or make mistakes. There are obviously better times to be invested than not, and there are obviously times that, with a functioning crystal ball, we’d happily skip over the pain. The problem is, as the market historians and statisticians have pointed out, even god can’t beat simply investing in the markets and letting what will be, be.

So to the question: “Is this time different?” Let me answer: It doesn’t matter. It never will. And if, by some happenstance, it finally is the time it’s different? Let me suggest that the stock market will be the least of your worries. In the meantime, stick to the strategy that’s been batting a thousand since the dawn of investing: Stay invested. No one has ever regretted staying invested and diversified long term, but I’ve had the sad opportunity to meet a lot of people who’ve regretted getting out when they thought that this time, it was in fact, different.

If you need further encouragement on the topic, please feel free to read the past 22 editions of this that I’ve written in one form or another over the past five years.

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