I wonder if your email, social media and text messages have been filled with offers about Black Friday and Cyber Monday? The palpable sense of missing out on a deal that will save you 10%, 20%, 30% or even 80% over a 24-hour period that sometimes extends to several days or even weeks in the run up to Commercialistmas.
This is the type of capitalism that we can all relate to, a discount on something… and gosh can’t that discount be rather large. Black Friday is brilliant for those that are focused and have planned purchases, perhaps even waiting the better part of 12 months for the announced day of the deal.
In truth Black Friday is the envy of financial advisers, many of them may not even realise why. We have our Black Wednesday, or more accurately, had it on 6th September 1992… which you may remember a certain Mr Soros managed to collapse the ailing pound resulting in a swift departure from the ERM – Exchange Rate Mechanism.
MONDAY… AND TUESDAY
Before that we had Black Monday 19th October 1987, which overran into Black Tuesday. No sooner had we all collectively popped our heads above ground following that ‘great’ storm (the one Michael Fish is forever linked with) than the stock exchange had to be closed as commuters could not get to work. When they got to their desks, they soon wished they hadn’t bothered, as markets nosedived around the world. The Dow Jones fell 22.6%, double the FTSE100 fall. This was the largest fall on a single day since 1929 (the Great stock market crash).
Falling prices on the stock market or in the value of the pound invariably send investors into a state of frenzied panic selling. The same discount sends shoppers into a state of frenzied buying. I’m going to push the analogy a bit… I suspect that most of what has been bought on Black Friday or Cyber Monday will not last more than 10 years, probably a lot less than that. Yet investing into global companies of the world will last a lifetime. Sure – some companies will go bust, but invariably merged or acquired by larger rivals; there will be replacements, new entrants and new solutions. The path of progress is relentless, whatever you hear on social media.
I can promise you that there will be a significant market fall at some point, you won’t like it, neither will I. You can attempt to guess when it will be, but your chances of correctly timing it are really alarmingly small. You can choose to weather the storm by ensuring that your planned income and requirements for capital are already in place by having a proper plan. The markets will recover, often very quickly, and at some point you will wonder what the fuss was about and have to google Black Monday to remember the scale.
The night of the Great Storm – a very youthful Dominic Thomas went to bed in his rented room and didn’t stir all night. He woke to see the garden sculpted by a tree that had been snapped in two; his landlord flabbergasted that he hadn’t stirred all night as the shaking chimney stack threatened to topple into his room.
SOMETHING FOR THE WEEKEND
Perhaps you will spend the weekend pondering your Christmas list and plans, remembering all those purchases last year… but can you? I suspect you can remember “A dog is for life, not just for Christmas”… much like your investments, they are here to serve you for your lifetime and frankly, we prefer to think of them as eternal as they are passed to your future generations. So when the big crash comes, I’m going to remind you to hold your nerve; prices are discounted temporarily; and ask you to consider buying at a massive discount. The next crash is a discount.