If You Knew the Future You Would…
One of the online groups I belong to is the Fidelity Investor Community. Most of the time I don’t spend much time there, and I rarely contribute now even though I used to be more active at one time. One post in April 2020 caught my attention. The subject was “Assume the lockdown is going to continue until August. (That is assumption in responding to this question.) How would that knowledge change how you are investing now and why? Would you short/go long/go to cash NOW if you knew the assumption to be true?”
On April 6th I read a Seeking Alpha report by Gil Weinreich. The subject was “Investing in the Time of Corona – How Do We Engage High-Market Volatility?” I had earlier responded in the Fidelity community that one of our recent activities was to support a Christian camp with a gift because they were being hit with reduced retreats leading up to the summer programs. The cancellations of the retreats impacted the camp’s income and their ability to make payroll. Weinreich observed something that many forget. He said, “…end-of-the-world predictions have a 100% failure rate to date.” He then suggested it is best to rely on statistics (when/if available) than leaning on the advice of experts who say otherwise. Here is a section of the report where he states this view:
Future Success Rates at 100 percent
I don’t have a pessimistic view of life or of my troubles and trials. I also don’t have a pessimistic view when it comes to investing. Rather, I seek information and look for truth. The prevailing doom-and-gloom mentality is not my default reaction. I try to make investing decisions based on the data provided by a company or an ETF fund manager. I also am very skeptical of any “it is the end of the world” proclamation. This includes environmental, financial, and political doom-saying. It also includes broad claims about the future.
My primary source for futuristic thinking is the scriptures. I have found God to be 100% accurate when he makes a prediction. One reason for my confidence is that he has shown he is 100% right for all past predictions. This includes the rise and fall of Babylon, Assyria and Rome. It includes the promises and prophecies regarding Jesus the Messiah. Therefore, I go to the scriptures regarding the end of the world. The rainbow in the sky reminds me there will be no future global flood. The clouds and stars remind me that there is a God who oversees all of the things we think are out of control. The arrival of spring reminds me that if something looks dead, wait and see, as it may actually just be ready to spring (pun intended) to life.
Furthermore, God has predicted the end of the world as we know it.
There is an end to the world and all commerce
The last book in the Bible, Revelation, clearly states that the leadership of the world will mourn. The merchants will be distressed, as will be the transportation industry, the food industry, the luxury goods industries, the clothing industry, and the manufacturing industry. All wealth will be decimated by a global meltdown. In fact, there will be a great burning. Even the sailors will be aghast at the destruction.
This brings me comfort, not fear or foreboding. There is an “end-of-the-world” coming but the way I respond to this worldview isn’t one of hand-wringing inaction. Rather, I want to do everything I can to be a help to others when they are struggling. One of the life-transforming activities in recent years has been two trips to India. I have seen first-hand that what we consider as the necessities of life for happiness and purpose are just a shadow. So that is what I shared in the Fidelity community. I don’t let temporary distress, including Covid-19 issues, move me from my investing strategies. Rather, I seek to continue to be a part of the solution until the real end of the world or the end of my life appears.
Failure Rate of End-of-the-World Predictions
All that to say, I agree with Mr. Weinreich. The failure rate of “end-of-the-world” predictions is 100% to date. However, don’t be unprepared for the one time it will be right, based on God’s predictions and his success rate. God’s success rate is 100%. In the stock market, “recovery is the norm.” In God’s universe, his recovery success rate is also 100%. He never can or will loose any of his adopted children.
As a result of my analysis, I don’t do any of the things the Fidelity community member suggested as solutions. I definitely don’t go short. I don’t have to “go long” because I think and invest long. I certainly don’t go to cash, unless we want to have more cash to give away today. As a dividend growth investor, I can usually navigate our giving using dividends.