This is by no means the worst economy we’ve ever seen. But with the exception of the first few months after the beginning of COVID-19, it is almost certainly the strangest and most volatile.
Inflation is the highest it’s been since the early 1980s and will likely remain for the foreseeable future. Real estate prices have increased at a rate that exceeds the pre-2008 crash. There’s a massive housing crisis, various supply shortages, rising interest rates, an inverted yield curve, and economic growth during the first quarter of 2022 was negative.
Indeed, a recession may be upon us. Some think another housing market collapse may be coming soon.
Wherever we’re going, one clear thing is that we are in a very volatile economy where investors should proceed with caution. Nevertheless, they should still proceed.
I’m not a fan of sitting on the sidelines and “waiting for the market to correct.” I thought the market would correct around 2018. I was wrong. Had I stopped buying, I would be regretful about it. Had I sold our portfolio, I would be even more regretful.
Indeed, I’ve known people who have been saying that since 2015. Needless to say, they’re still waiting.
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20-Mile Marching
Jim Collins is best known for his classic Good to Great, but I believe his book on how to invest in a volatile economy, Great by Choice, is even better. One of Collins’s key points is the importance of a consistent approach through both good and bad times. He refers to this as “20-mile marching,” an analogy to the famed explorer Roald Amundsen.
In 1911, Amundsen and his team faced off against Robert Falcon Scott in a competition to see who could reach the South Pole first. Scott’s team would go as far…