A good question. Things seem so screwy nowadays…
… but truthfully, it is likely to get far worse before it gets better. So it is appropriate to consider what is going on and what to do.
Disasters
Some disasters are “natural,” in that they are caused by (take your pick…) mother nature, acts of god, laws of physics, and so on. Think earthquakes, tornadoes, volcanic eruptions, some floods, etc.
Some disasters are considered combinations of natural forces and human input. Think human-caused wildfires, floods caused by human engineered infrastructure, wildfires caused by electrical equipment, and so on.
And some disasters are totally human-caused. Think wars, stock market crashes. vehicular accidents, crime, industrial accidents, etc. And, as we all are experiencing, political upheaval.
Our Condition
In view of whatever turmoil is current, what are we to do? Do we keep invested despite the disarray we find ourselves in from time to time? Like now.
I’d say it depends on our goals and how we view our investments.
Let’s take some examples.
It is well known that many investors sell when bad new hits. For example, news of natural disasters often causes sell-offs of insurers, for these insurance companies must pay claims on losses.
Another but opposite example
When World War II broke out, John Templeton phoned his broker and told him to buy 100 shares of every New York-listed company trading at less than $1 a share.
Is There A Lesson Here?
The world is full of volatility, and it is impossible to know what will happen, let alone what will happen next. We can anticipate trends based on current events, but things change.
That is why I do two things:
1. I stay invested.
2. I retain savings for future use.
I stay invested because that is the best course of action for a dividend investor. Dividends and stock compound spectacularly over the long term.
Retaining funds for future use has two purposes. One is obvious: to take advantage when prices fall. Secondly however, when turmoil increases, it is important to have cash.
As attributed to Warren Buffett
Cash is like oxygen. When you have it, you don’t think about it. When you don’t have it, that is all you think about.
The Current Situation
As we write, tariffs are all the news as Trump capriciously thrashes. I am not giving up on my current holdings. I am letting their dividends continue to reinvest. However, until and unless some breathtaking bargains appear, I am holding my cash in an interest-bearing account.
I anticipate much more volatility moving forward. As long as Trump and his MAGA fiends have any power, that volatility will continue.
Turmoil enough for you? Let me know here.
The painting Peasants Carousing And Playing Cards is from the workshop of Workshop of Jan Massys (also spelled Jan Massijs or Jan Matsys), Flemish, 1509 – 1575.
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