25 MAR | AN UNCERTAIN TIME CALLS FOR A CERTAIN RESOLVE

Road trips are great.

As a kid, we didn’t have phones to keep us occupied and only a few games to chew up time. The “99 Bottles of Beer” song (“99 Bottles of Root Beer” in our family) got real old fast.

With nothing else to do, we spent the time asking our parents a lot of questions and just taking in the new scenery.

Every new road trip was a new adventure that involved uncertainty – mainly how long we’d be cramped in the car with our increasingly annoying family.
That uncertainty was one downside to road trips.

No matter how far away we were from the destination, I never had a clue or concept of when we would arrive. Sure, my parents had an idea of how long the trip would take, but I didn’t wear a watch to keep track of time, and even if I did, it probably would have made me even more impatient.

Time seemed to drag – especially on those trips to a new destination – and the more time I spent in the car, the more impatient I got, and the more annoyed my parents got.

That uncertainty led to questionable behavior like asking my parents to stop every half hour so I could go to the bathroom or loading up on way too many treats because “what if I was gonna be in the car another ten hours?”

Looking back on those trips now as an adult, I’m surprised by how close those destinations were to my childhood home. That 300-mile trip that took four hours sure felt like four days.

Follow up trips to a place we’d visited before went a lot smoother. With experience under my belt, my expectations were tempered, and there was less uncertainty about when we would arrive at the destination.

I was familiar with the trip, so I spent less time annoying my parents, asking if we were there yet, and spent more time entertaining myself. This made for a much more pleasant trip for the entire family. Everyone arrived with their hair still on their heads.

Fast forward to today, and we, as a country, are all faced with a new destination.

COVID-19 forced us all onto this big bus called panic, and nobody has any idea of when the bus is going to stop. Like kids on a road trip, we truly cannot see the destination. The uncertainty makes it seem like a resolution is far away, and we think the ending to the disruption is never going to end.

Just like kids, this uncertainty is driving many investors into making questionable decisions. A recent study by University of Pittsburgh researchers found that anxiety blocks neurons in the part of the brain responsible for good decision making.

It’s easy to see how anxiety over COVID-19 is driving investors into making bad decisions, with many liquidating their stocks to have cash on hand for an uncertain ride. Millions of investors may think otherwise, but I think the ending to all this COVID-19 madness and a new normal will come sooner than later.

It’s like taking that road trip for the first time – it seems so far away right now because of uncertainty – but when we arrive at the destination, we’ll realize it didn’t take that long, and some of us may regret making decisions based on panic.

The worst thing an investor can do on this trip is to join in on the chorus of doom and gloom. Following the herd in a panic can lead you right off a cliff. As investors head for the exits and as more and more join in, a full-on stampede will appear, and the result will be blood on the streets.

Investors that sell off their investments in a free fall and stay on the sidelines will never fully recover their losses. Investors who sell at the lowest prices but wait to get back in the game only when prices are much higher have a huge hole to climb out of.

The investors who will survive this uncertainty will be those who create their certainty. Go against the flow. While other investors flee, seek out those investments that will thrive during a downturn.

Do you know which investors are active right now?

There is a minority of savvy, ultra-wealthy investors that are always prepared for uncertain road trips like the one we’re experiencing right now with COVID-19. They may not always know what will cause uncertainty, but they’re always prepared.

How?

They go against the flow. They eschew the stock market for recession-resistant assets that will carry them through any uncertain times, no matter how long they last.

They look to alternative assets with long-term windows. They prefer assets that cash flow, appreciate over time – all backed by hard assets.

Certain segments of commercial real estate, recession-resistant cash flowing businesses, agriculture, and energy assets fit into their wheelhouse.

Private investments with long-term windows shield their assets from the Wall Street volatility and uncertainty, gripping the rest of the country.

So while the rest of the country asks, “Are we there yet?” the ultra-wealthy sit back and relax, reading their books and doing their crossword puzzles. They may not even care when we arrive at the destination because the truth is uncertainty doesn’t bother them.

The best thing you can do right now as an investor is to stay active.

Do not withdraw completely.

Stay focused.

Prepare and continue to stay active in your investments.

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12 comments
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