Really nice to be featured in Sam Ro’s year-end wrap of investing wisdom. When the market went haywire in January, I said this:
“Volatility is not risk, it is the source of future returns,” Ritholtz Wealth Management’s Josh Brown said in January. “Drawdowns should be embraced, not fled from. If anything, a better timing tool would be to up one’s allocation in times like these, or to skew one’s elections further toward equities to take advantage of a temporary decline. This is a passive way to exploit events that are beyond our control, and there is the added benefit that it actually works.”
If this year had ended negatively as opposed to positively, you could take the above quote and hang me with it for a cheap laugh. But the last laugh, the only one that matters, would be all mine.
Because regardless of outcomes over 12 months, 36 months, etc, in the end, thinking long-term and accepting volatility (and yes, drawdowns) is the only way to perform over ten years or more. There’s no shortcut where you can have only the pleasure and none of the pain. Anyone telling us otherwise is selling lies.
Click over to read the whole thing at Yahoo Finance. Oh, and make sure you check back here at TRB tomorrow for a nice treat.