We all want our net worth to grow up and to the right – with no set backs or volatility. We want our happiness to travel a similar path – without experiencing anger, sadness, or frustration. We want our career to do the same – never getting passed over for promotion or making lateral moves. And the list goes on and on.
In Finance, the direction we want to see on any chart of the investments we own is up and to the right. But if you have ever looked at a stock chart, you will notice that the only thing up and to the right is the long term trend, seen from a very zoomed-out perspective. From a closer perspective, that trend is constructed of ups and downs and zigs and zags, all along the way.
All movement in life is a constant cycle of ups and downs. We struggle. We experience disappointment. We fail. We experience loss. These are unavoidable parts of life.
But without the taste of bitterness, we would have no appreciation for the taste of sweetness. Struggle, challenge, and loss are what give life its depth, and make it so complex, so precious, so fulfilling. Yes, we may have streaks in life where everything seems easy, like the wind is at our back, billowing out our sail and shooting us ahead, beyond our own efforts even, but we can also expect other times when we feel like we are fighting against powerful headwinds, scrapping for every inch of progress, and even getting pushed backwards.
When life starts to feel hard – and it will at times feel hard – remind yourself that life skews positive over the long run. The best way through the bumps and lumps that life serves up is to remind yourself that there is growth and gain on the other side. Like with every coin, there are two inexorably connected sides to life, and you can’t have the highs without the lows. Cultivating an optimistic mindset is your best armor through life’s inevitable dips.
If we use the market (S&P 500) as an analogy for life’s positive skew, we remind ourselves that the market is up three out of four years (or 75% of the time). And a friend recently shared with me that when the market is up the market is really up with an average over 20%+ if you isolate only the up years. The worst thing you can do as an investor is to sell at the bottom of a market correction; Howard Marks refers to this as the cardinal sin. So, like with investing, the best thing to do in life is to stay “invested” so as to enjoy the inevitable recovery.
Currently in the thick of a tough time? Hang on. You will have the wind back in your sail soon. Life will feel easy. You will feel invincible. You will feel joy, happiness, and fulfillment. When life is going our way we are winning and that is one of the most intoxicating elixirs there is in life. You just need to stay prepared mentally, physically, and emotionally for the next “up and to the right” turn in the cycle because life doesn’t actually travel a straight line!
– Gen Y Finance Guy
