Working Wealthy – Fish Brain

January 26, 2021

Let’s be honest—2020 was a bit of a dumpster fire for many of us. Between the pandemic, a contentious election, separation from family and friends and a myriad of other pitfalls, 2020 is something many of us would like to soon forget.

The symbolic act of turning the calendar page from December 2020 to January 2021 was momentous for many.

But we learn from our struggles. And usually, that means taking some time to reflect on what happened just months ago and how it feels or looks today.

I’m often cursed with a fish brain—I forget an idea or notion only moments after thinking it. Call it age, call it carelessness, but whatever it is, I’m focused on not allowing my fish brain to paper over 2020. Investors learned or relearned three critically important lessons this past year:

1. Elections Matter – well, kind of. The political, social and emotional aspects of elections matter. Our politicians and their actions matter. However, elections rarely materially impact markets and long-term returns for investors.

You are in good company if you focused any amount of energy on how a new or incumbent president might influence the market. However, remembering your focus on the long-term allows investors to stay focused on the historical evidence that the person in the White House won’t make or break your portfolio.

When 2024 rolls around, I may have to repost this blog.

2. Markets Crater and Recover – March of 2020 was gut-wrenching on several levels. Investors in just about every asset class saw their portfolios plunge daily. And while most of us today express quiet confidence about having the stamina to wait out the volatility and allow our investments to recover, it will soon be forgotten.

Just think back to December 2018. It was one of the worst Decembers for stocks—ever. But in just two short years, we forgot all about it. We let the anxiety of March’s market ruin our sleep and consume our thoughts.

Hopefully, we have more than 27 months before our next major market event, the likes of March 2020, but we will surely need to stay focused on what happened in 2020 to keep a steady hand.

3. Pandemics – COVID-19 has had a global impact and touched all of us in different ways. Pandemics are unique; they alter our lives, attack our health and create disruption. As terrible as COVID-19 is, it’s not necessarily unique when considered in the context of human history.

The 1918 flu pandemic, or Spanish Flu, was devastating. Hundreds of millions suffered from it, and tens of millions perished due to it. What’s less known is the 1918 pandemic came just 30 short years after an equally terrible flu pandemic of 1889. Some called it the Russian Flu or Asiatic Flu; estimates account for a million deaths from the 1889 pandemic.

Pandemics are a sad reality and now even more real from what 2020 brought us. None of us will easily forget COVID, and it’s my hope that I remember the emotional, social and business lessons learned this year.

No fish brain for me when it comes to 2020.

So, here’s to 2021—may it bring something better for all of us.