Festina lente is a classic motto adopted by Greek emperor Augustus as well as the Medici family from the Renaissance. Directly translating to “make haste, slowly”, this simple proverb immediately strikes us as a riddle. After all, how can we rush, slowly? While it’s a literal oxymoron, the phrase has come to be understood as a call to seek thorough urgency. Financial planning and investment management is all about keeping emotions in check and having an anchor in the storm. No one expects financial professionals to predict the future, but everyone expects to hear something to calm the anxiety. Sorry, there’s no magic pill here either. What I do know is that avoiding the anxiety is impossible. Unless you’re a robot, being emotionally attached to your investments happens to everyone. As we move on through our lives and our wealth continues to grow, that emotional connection only becomes more volatile. So what can we do? We can arm ourselves with education and realize the decision has already been made. When it was rooted in slow, methodical logic. Before the storm.
- The average annual range of the S&P 500 each year is 14% (meaning from the high of the year to the low of the year). This year so far, it’s been 16% from the high in September to the low made in February.
- Daily drops of 2% or more happen about 5 times each year.
- On average, every 5 years, markets decline more than 30% in a year.
- Markets rise 7 out of every 10 years on average.
- In the last 88 years, the average total return of the S&P 500 during rising interest rates is 10.5%. The average total return when rates are falling? 8.4%.
Now is not the time for Warren Buffett quotes, or even the cold stats above. It’s the time to see whether or not you believe them. Most people consider themselves long-term investors. Don’t try and tinker with the process. We’ve already made haste, now is the time to sit back. Festina lente.
– Adam