In the movie “Raiders of the Lost Ark”, Harrison Ford stars as Indiana Jones. One scene you may remember involves a trip into an underground tomb in search of the Ark of the Covenant. Upon realizing that the floor of the tomb is covered with snakes, Jones grumbles “I hate snakes.” It turns out that this brave swashbuckler is fearful of our squirmy, scaly friends. Here’s a secret: I don’t like snakes either.
Snakes are fearful for many people and for good reason. I have a deeper dislike of snakes following my recent trip to Montana with my family. While out for a hike with my daughter and some company, our dog Libby came across and was bitten twice by a rattlesnake. Normally a superbly athletic and energetic dog, almost immediately after the snake bites she slowly declined into what appeared to be a stupor. My nephew came running back to our cabin to find me. He and I hopped in our four‐wheeler and drove up to the hikers where I found my daughter valiantly carrying our 84 pound dog over her shoulders. I grabbed Libby from her and wound up rushing our dog to the vet. After a quick diagnosis, the vet prescribed Libby some antibiotics and other medicines to overcome the pain and the toxin. I am very happy to report that Libby is recovering well, but my guess (and biggest hope) is she will have a fear of snakes that keeps her out of trouble in the future.
As for me, I was scared. I guessed that Libby was bitten by a snake because of her symptoms, but nobody saw it happen. She declined so rapidly right in front of my eyes that I will be more fearful of snakes and their potential danger. And to be totally honest, I will worry about my dog (or my grandchildren when the time comes) stumbling across a rattlesnake on our property in Montana. Vigilance and continuous education will be my response to this fear.
I share this story because the market can sometimes “bite” investors. Important lessons can be learned from these experiences too. Big sharp drops in the market, like last week, raise the level of fear for investors. It is inevitable. A headline on a promo piece I received this week from a mutual fund company said “Stocks Drop. Fear Rises”. Aptly put.
Newer investors might feel snake bitten as they experience financial pain for the first time. More seasoned investors generally remain patient – you’ve been through this before. Some savvy investors look for investment opportunities amidst crisis and the sharp rise in fear.
Am I diversified? Do I have an ample cash cushion? Is my allocation too aggressive? Do I have the patience to withstand a sustained market correction? Figure out the answers to these questions beforehand and understand how you may respond to unexpected negative surprises. Discuss your thoughts, concerns and fears with me. These are essential aspects of our due diligence. And experience tells me that educating yourself in advance of these occurrences will help. Diligence and education.
Unfortunately, I know that the market snake will strike again. That is the nature of markets. And the natural defense system of snakes. And it hurts. But we are able to survive. Diligence and education will help the next time the snake bites.
Ralph McDevitt August 8, 2019
