Worried Faces

io19.02Television producers love shots of nervous and worried fans during big sporting events. They convey the drama of the moment and the importance of the game to everyone watching. But I wasn’t expecting to see my daughter’s face in that context. That’s a screenshot of her on the right, with her husband, from the national broadcast of an MLB play-off game in 2017.

Emily and her husband Josh are big baseball fans and have partial season tickets for the Washington Nationals. In 2017, the Nats were in the play-offs. My wife and I were home in San Diego, watching them on television in a tense match-up when we saw, over and over again, our daughter’s worried face on the screen. Our phones (and hers) lit up with texts from people who recognized her. Everyone who knew Emily, especially in a sports context, is familiar with “Emily worried face.”

She’s expressive and, well, she worries.

A big game is a big deal, even for those without expressive faces. From first pitch to final out, a rush of adrenaline overtakes us. The bodies of nervous players and fans alike produce cortisol, the “stress hormone,” in abundance. We fans may “only” be watching, but it feels like we’re playing. A New England Journal of Medicine study found that viewing a fraught athletic contest more than doubles the risk of a cardiovascular event. Intense fans have a very emotional “fight-or-flight” response to what they are watching, with an increase in the sympathetic nervous system output and in adrenaline levels. This can increase heart rate, blood pressure, cause localized vasoconstriction — a narrowing of blood vessels — and sometimes arrhythmias, or abnormal heart rhythm. In fact, there is a 300 to 400 percent increase in blood flow pumped out of the heart during a big game.

Investing requires elements of being both a player, a coach, and a fan. When markets are turbulent, as they were (especially) in December, there are many investors with worried faces and with cortisol coursing through them in abundance. Lots of people seem to think that “this is a perfect time to panic.”

Are they right?

I regularly write that investing successfully is hard. And it is. Really hard. It is intellectually challenging, yes, yet it isn’t Rubik’s Cube hard, where it’s difficult but you can solve it and move on to something else. It is much more like learning to play the piano well or living a healthy lifestyle. It requires constant patience, discipline, and vigilance. Every single day.

Good investing is boring, even when the markets are roiling. Day after day.

Good investing is consistent, even when your feelings are screaming for you to be aggressive and take precipitous action. Month after month.

The exceptional, the truly worthwhile, takes time. Year upon year.

Good investing is powerfully rewarding, but it can take decades to arrive. It is a long, often tedious slog in the same direction.

That’s why regularly getting back to basics is so important. The primary investment lesson over at least the past 100 years: Own stocks in the largest amounts you can and hold them for as long as possible. Your default setting should be to buy stocks rather than sell them. Volatility will make doing so hard a lot of the time. However, volatility is the necessary price to be paid for the outsized returns available from stocks as compared with all other investment opportunities.

If you are inclined to panic – and we all are, it’s human nature – current events will always provide more than ample justification. As the Nobel laureate Robert Shiller says, parroting Jimmy Buffet, “We’re always in a bubble somewhere.”

The past year was a reminder, after nearly a decade of one-way traffic, of how unpredictable markets can be. The extended period of historic calm in equity markets that dominated 2017 ended in 2018 as volatility resurfaced in a major way. For example, after recording daily declines of one percent or more only four times in 2017, the S&P 500 fell by more than one percent on 32 separate days and more than three percent five different times.

Market performance does not arrive on schedule or upon demand. However, as legendary investor Shelby Davis said, “Bear markets make people a lot of money, they just don’t know it at the time.”

But only if you can conquer your worry and stand it.

5 thoughts on “Worried Faces

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