Have you ever thought your child was doing just what you had hoped for, then all of a sudden they turn “Terrible Two” on you? Experiencing this last night brought to mind the similarity to markets at the moment.
Taking my two-year old son home last night from a birthday dinner with friends, and as I carried him up the stairs he calmly said to me “Bed time daddy”. I thought “Awesome, I don’t need to fight with this tired boy.” Sometimes investing feels like this, we see structure in the market, there appears to be direction, and logic. Europe is sorting its stuff out, and we can develop our portfolios with a view of what can reasonably be expected to happen.
Then the unforeseen occurs. Apparently, changing into pyjamas was not part of the “acceptable” bedtime ritual last night. The ensuing thrashing, tired two-year old took some quiet calming from his mother before he drifting into a deep, and much need sleep.
It made me remember that the violent, unpredictable turns in the markets of late are just like this, a two-year old throwing a tantrum because things don’t happen the way they expect it to.
Ultimately, that two-year old still reached the same result: sleep. As investors, we need to remind ourselves that the tantrums in the market are just that – tantrums, and they too end, and our long-term expectations will again become apparent.
Seeing through the tantrums is hallmark of being more mature…