Nowhere to Hide

It’s been a rough start for the year in the stock market. To find a worse performance through the end of April, you have to go all the way back to 1970.

It’s also by far the worst start to the year for the bond market, going back to 1990 (h/t Jim Bianco).

This has been a painful environment, to say the least. It’s not the depth of the declines that are hurting, it’s that it’s happening in stocks and bonds at the same time. For just the second time ever, stocks are down 10% and bonds are down more.

Everyone understands the contract that they sign with the stock market. I will invest and compound my wealth over time and in exchange, there will be ups and downs. The diversified investor signs another contract that has now been violated; when stocks go down the fixed income side of my portfolio will buffer the downside. Well, that’s no longer happening, which is why, along with inflation and other factors, investor sentiment is in the toilet.

There are plenty of good reasons to be selling individual stocks right now but not a single good reason why you should be selling a basket of stocks. Not a single person has ever entered into an investment with the following premise; “I’m going to buy and see how it goes. But if I lose a lot of money and get scared I’m going to panic sell and then regret that decision later on.”

But that’s what happens when you buy something without a strategy, plan, or process. Getting out is easy, getting back in is impossible. But that’s another post for another day.

We covered all of this and much more on the newest episode of The Compound and Friends with the marvelous Jurien Timmer