The Wall of Worry

My Mum turns 70 in May.  I have written about her before and how she inspires me every day.  She raised five children (I may be biased about my siblings but I believe them to be some of the world’s best humans).  She also fostered three children after we had grown up and showed them a way of being that they had never experienced before.  In the very final stretch of her 60s she is taking on perhaps her biggest life challenge.  This month she is climbing Mount Kilimanjaro, the highest mountain in Africa, over 19,000 feet above sea level. My youngest sister, her fiancee and his Mum are doing the climb too. If I wasn’t busy growing a new business and looking after three young children I would be right there by her side.

Mum is fit and healthy only because she never sits still.  She has never done any formal exercise that I can think of, so starting at this point in her life is no mean feat.  She has trained and prepared, which has not been free from worry.  She successfully climbed Snowdon in Wales, and fell at the very bottom.  She sliced her head open and had 14 stitches.  That might have stopped some almost 70-year-olds.  But not her!

At the top of Snowdon.

At the top of Snowdon.

For her it was a temporary set-back.  She rested and then got back up.  Back to her personal training, back to her rigorous walks up the local hill.  She continues to advance.  I know she is nervous but she is climbing her wall of worry.  It’s not that I want to liken the stock markets to my Mum but climbing a wall of worry is exactly what they do.

Investopedia defines a wall of worry as the markets’ periodic tendency to surmount a host of negative factors and keep ascending.  It refers to ‘their resilience when running into a temporary stumbling block, rather than a permanent impediment to a market advance.’

Markets are always climbing a wall of worry – just look at the chart below.  There has never been a permanent impediment to the market’s advance. 

Source: Robert Seawright, Above the Market

Source: Robert Seawright, Above the Market

My Mum could have found a million reasons not to climb a giant mountain in the middle of Africa.  The memory of her fall would be enough for most people. 

And so it is with investing.  There are always a million reasons not to invest or to sell if you are already invested.  Check out this chart from Morgan Housel:

Source: Morgan Housel

Source: Morgan Housel

Michael Batnick recently created a similar chart going back to 2009 and then tried to create the opposite chart.  Not easy!  He wrote:

We’ve seen a thousand versions of this chart, but we haven’t seen the opposite, one that plots all of the positive developments over the last nine years. So I decided that would be fun to create, but I quickly realized, as I stared blankly at the screen, that coming up with this list was much harder than I thought it would be. This reminded me of something Bill Gates said: “Headlines, in a way, are what mislead you, because bad news is a headline, and gradual improvement is not.”
— Michael Batnick

Markets are resilient because we humans are resilient.  Just like my 70-year-old Mum taking on Mount Kilimanjaro, the markets take on all the ‘crisis’ events.  Sometimes they are set-back and fall, but the permanent advance always continues.

Just like climbing a mountain, investing in stocks will always be a bit worrisome because of its uncertainty.  The role of a good advisor is to reduce the worry as much as possible.  The thing to remember is that it’s the uncertainty that gives us a return.  If you want the view from the top of the mountain, you have to climb it.  Cash is comfortable, so is sitting at the bottom of the mountain.

If you want to read a bit about my Mum’s charity story, click here.

Georgina Loxton