It’s difficult being an optimist these days.
But it’s never been easy being hopeful.
Imagine living through the (very bizarre) French Revolution. Or the (viciously underrated) English civil war. Or the (never ending) Russian revolution. Or the (uproarious) us civil war. Or the (devastating) American depression. Or the turbulence of Vietnam (both for the Vietnamese and the Americans and our allies.)
History is full of terrifying movements of history and perilous conditions.
Next to “change”, turbulence is the second-by-a-nose common thread that runs through the fabric of our history as humans.
However, a crisis, given enough time, will eventually fade and conditions have almost always reverted to normalcy and some semblance of peace.
And so now we find ourselves in another time of strife, upheaval and uncertainty.
Is it scary? Heck yes.
Does it take guts to not freak out? Absolutely.
Should we build bunkers and stock pile dry cereal, breed rabbits and have canned peaches for an occasional treat?
Sometimes that indeed sounds like a great plan.
Or should we have the courage to believe in the scowling face of gloom that the good in humanity will endure, countries will back off from warring and the positive sides of capitalism and innovation will sprout again?
I’ve lived enough to believe that we should.
Being a pessimist and shouting that the “end is nigh” has always gotten attention. And if a blow hard has been in the business of selling fear, it’s been a profitable message.
On the other side of the street, however, being an optimist has often proven to be a more profitable route.
Here's one of Baird's top strategists, Ross Mayfield, on how major events can be shock that can be frightening for sure, but also a seeming bump in the road along the way.
"Remember what you’re invested in. Remember what your time horizon is. Remember why you’re invested in the first place. There have been a lot of grim geopolitical events, unfortunately, over the last 30 - 50 years. And if you've stayed invested through them, you've reaped the long-term gains of the stock market. So – as usual – stay focused on the long-term."
Here's more from Ross and Michael Antonelli about Covid, 9/11 and the Kuwait war and how the market has performed after geopolitical shocks.
As the chart attached shows, 250 trading days after the Korean War broke out, returns were 18% higher. 250 trading days after the start of the Gulf War in 1991, the market was up 28%. 250 trading days after the Iraq war began in 2003, the market was also 28% higher.
As we’ve seen time and again, betting against our “better angels” and, to some extent (to shout out Warren Buffett), betting against the United States has not been fruitful. Here's Buffett on bad news: "In short, bad news is an investor's best friend," Buffett explained. "It lets you buy a slice of America's future at a marked-down price."
Are we in for higher gas prices and disruption from AI? Probably.
Will the economy digest these seismic changes and adapt?
Also probably.
So the best path to go down, literally since the dawn of humans, is the one where we are calm, we trust our plan, we remain diversified and we stay the course.
After all, this too shall pass.