“Some days the gales are howling, Some days the sea is still as glass” The Grateful Dead, Lost Sailor
Good morning,
It’s certainly been a stormy start to 2022….the winter weather has been wonderful for the ski hills, but the market has had the blustery start to the year.
Markets seem to be struggling to find footing again this morning, perhaps due to the Bills game last night, but more likely in anticipation of the preliminary growth data for the U.S. coming up this week, along with a meeting of the Federal Open Market Committee, which will come hours after a Bank of Canada meeting that is expected to result in a rate hike.
The main culprit of the recent volatility has been government bond yields which have moved to highs not seen since before the pandemic. Despite the fact that U.S. stocks historically deliver strong gains in Fed hike cycles, there continues to be some angst among investors that central banks may be aggressive in tightening monetary policy. Investors should get some confirmation on this front in short order as the Bank of Canada and U.S. Federal Reserve are set to make announcements this week.
The tailwinds of very low interest rates and bond yields are shifting. This presents a headwind to asset valuations and will create bouts of volatility as the markets reposition for a changing monetary policy backdrop. Yet, we have confidence in the economic outlook and the prospects for earnings over the months to come. As our clients know, we have been prepared for this volatility. Over the past few months we had already “reefed the main sail and lashed the mast” as The Grateful Dead suggests in the lyrics from the iconic song, Lost Sailor. Choppy markets and down markets are not only a part of the journey, but a function of achieving returns over time, allowing us to add to positions in down markets. Although, in months like these it may seem that your “compass card is spinning and the helm is swingin' to and fro” as the poetic lyrics submit, it’s ever important to remember that you are not a “Lost Sailor”.
“Non nobis solum nati sumus” Marcus Tullius Cicero
Cicero’s wisdom translates to “Not for us alone are we born.” Understanding that wealth takes responsibility, discipline and intention, we are here for our clients to help them define wealth with purpose. As an Advisor, Partner, Risk Manager and Navigator, we ensure they are prepared for their own unique journey with an unwavering focus on the horizon….not only ensure that Wealth is always aligned with intentions, but that you arrive at your destination with both peace of mind and an unforgettable journey.
“When life hands you lemons, you make lemonade. But when life hands you hurricanes, you go surfing.” Jon Foreman
In keeping with the rough waters analogy, I’d light to point out that often, as we find ourselves in certain environments, the impact of the environment and how it affects us can change with our perspective. If you look around the globe, the best surfing waves are found in the harshest conditions. To some, rough waters are dangerous….to others, variability, uncertainty, volatility is filled with opportunity. We, at Henderson Wealth, are explorers of opportunity, wave seeking in market appreciation and depreciation to enhance your wealth. There is clarity in seeing what others are unable to see, in finding grace, harmony and tranquility in places others overlook.
Stay calm and prosper
In his latest investor letter this week, Howard Marks reminds us that when you find investments with the potential to compound over a long period, one of the hardest things is to be patient and maintain your position. “Superior investing consists largely of taking advantage of mistakes made by others. Clearly, selling things because they’re down is a mistake that can give the buyers great opportunities”
“Everyone wishes they’d bought Amazon at $5 on the first day of 1998, since it’s now up 660x at $3,304.
But who would have continued to hold when the stock hit $85 in 1999 – up 17x in less than two years?
Who among those who held on would have been able to avoid panicking in 2001, as the price fell 93%, to $6?
And who wouldn’t have sold by late 2015 when it hit $600 – up 100x from the 2001 low? Yet anyone who sold at $600 captured only the first 18% of the overall rise from that low”
Peace in staying the course
“Tranquility can’t be grasped except by those who have reached an unwavering and firm power of judgment—the rest constantly fall and rise in their decisions, wavering in a state of alternately rejecting and accepting things. What is the cause of this back and forth? It’s because nothing is clear and they rely on the most uncertain guide—common opinion.” Seneca, Moral Letters, 95.57b-58a
In Seneca‘s essay on tranquility, he uses the Greek word euthymia, which he defines as “believing in yourself and trusting that you are on the right path, and not being in doubt by following the myriad footpaths of those wandering in every direction.” It is this state of mind, he says, that produces tranquility.
“If one does not know to which port one is sailing, no wind is favorable” Seneca
Clarity of vision allows us to have this belief, tranquility and peace are found in identifying our path and in sticking to it: staying the course, while making adjustments depending on conditions, naturally, but ignoring the distracting sirens who beckon us to turn toward the rocks.
As I’m sure The Grateful Dead would agree…….today, and every day, take a moment to recognize your longitude and latitude and look forward to the journey with confidence, optimism and gratitude.
“I liked surrendering to the onrush, the uncertainty, the serendipity of the surf and the road.” William Finnegan, Barbarian Days: A Surfing Life
Be well & enjoy the moments
Mahalo,
Derek