In markets like this, almost everyone is unhappy.  Some conservative investors might have done OK if they owned lots of government bonds, but most are down more than they expected and they didn’t expect to be down at all.  No growth-oriented investors have been spared.  For some, it’s been down right ugly.

At this stage, it’s hard to say anything that hasn’t already been said.  Investment professionals, including me, have been reminding clients that we “can’t predict the markets” (that’s for sure), it’s important to “hang in there” (agreed), and “stocks are on sale” (Is it Boxing Day yet?). 

That tired and tiresome advice hasn’t made anybody any money yet, so it has less credibility as the days go by.  But I’ve lived through enough of these extreme events – the breakdowns (including Black Monday; the Long-term Capital meltdown; the Asian crisis; bursting of the tech bubble) and the rocket rides that preceded them - to know that long-term value eventually gets recognized.  We just don’t know how long it will take to happen.

I’ve also learned that there are two parts to weathering the market storm.  First, it is important to preserve capital on the way down.  That goes without saying.  The second part, however, will be measured a few years from now and involves making sure you fully participate when the markets go up the other side of the valley.  It is easier if you got the first part right (so far), but both elements will factor into your returns 3-5 years from now.

The last five quarters have been hard on investors, but it’s important to look forward from here.  For sure we have to be cognizant of how much further down the valley floor is, but we also have to start thinking about what is going to carry us up the other side.

As I said last week, while you’re hiding under the desk, start thinking about how you’re going to profit from all this turmoil.  It is time for investors to look for ways to let the ‘greedy’ side of their personality come out, as hard as that is to do for most of us.