Galapagos Investment Lessons: Patience and Adaptability
By Robert Grey, Client Development
I recently had the privilege of visiting the Galapagos Islands, Machu Picchu and the Amazon jungle. I’ve found that clients often mention traveling as a future retirement goal. However, I encourage people to consider traveling sooner rather than later, because the experience can teach so many valuable life lessons that deepen your appreciation and gratitude for your life in the here and now.
Given my trip, perhaps it makes sense that the market’s recent dips and dives reminded me of a quote I came across at the Charles Darwin Research Center. It read: “It is not the strongest of the species that survives, nor the most intelligent that survives, it is the one that is most adaptable to change.” I believe this quote could just as easily be restated as: “It is not the richest of investors, nor the most intelligent that survives, it is the one that is most adaptable to change.” Let me explain.
After returning from the trip, I looked at my investment account statement and saw that my values were down significantly from this time last year. Then, I recalled the Galapagos iguanas. These archaic animals have survived so long because they are very adaptable and possess supreme patience. They are satisfied and contented creatures perfectly happy to spend hours basking in the sun.
Most of us do not live our lives like iguanas. Maybe that’s why they’ve come to have a symbolic meaning in my life, reminding me to stop worrying and take a step back, to live simply. They reinforce for me the importance of taking time for myself and to relish the wonderful things in the world, rather than focusing on my stressors and life’s complications.
Iguanas, however, do not have brokerage and IRA accounts. Our lives revolve around a series of events and responsibilities, making it hard to escape mentally and emotionally. We are trained to live this way because of how society functions, and to break free of these norms is truly challenging. We worry that we will outlive our investment savings.
When the sun doesn’t shine, iguanas do not worry that the sun will never shine again. When a food source runs out on land, they learn how to swim. When stock market pundits suggest that the Dow Jones Industrial Average could fall another 30-80 percent from current levels, an iguana would ask, “Then what?” The answer: It starts going back up toward the next “all-time high.” The iguana might then ask, “Has there ever been an ‘all-time low’ in the Dow?” The answer: Never! In that case, the iguana would then return to a spirit of positivity, gratitude and contentment.
But how? How does an investor achieve positivity, gratitude and contentment amid market turmoil and its accompanying anxiety? I’m reminded of an especially pertinent quote from Ralph Waldo Emerson: “The antidote to fear is knowledge.” To that end, consider:
Iguana patience – Since 1950, there have been 57 different 10-year investment periods (for instance, the 10-year periods from 1950-1959, 1951-1960, 1952-1961, etc.). According to BTN Research, the S&P 500 Index produced an average annual total return of less than 7 percent during only 14 of the 57 decade-long periods (or 25 percent of the time). Of the 57 periods, 19 (or 33 percent) resulted in an average annual total return of at least 14 percent. That means that 42 percent of the time, the average annual total return was between 7 and 14 percent.
Iguana adaptability – Given their volatility, an iguana would recognize that stocks are a source of food in 10 years (or longer) and are not to be consumed now. In order to survive, they know to widely diversify their sources of food, so that there are no worries about today’s meal. Stock ownership represents your best chance to grow your investments over decades, not months.
So think like an iguana. Relax in the sunshine.
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