“A smooth sea never made a skilled sailor.”
My wife shared the old English proverb with me earlier this year after a particularly challenging day at the office. As chief executive of Full Sail Capital, I’ve seen plenty of challenging days at the office this year, so Kim’s words were particularly meaningful.
The smooth sea adage became famous after President Franklin D. Roosevelt used it to close one of his fireside chats during the Great Depression. That was a difficult time in American history, much like the pandemic of 2020, when businesses failed, unemployment soared, and financial markets plummeted.
While the turmoil is not over, we have plenty to be thankful for this year as we watch multiple vaccines against the coronavirus being launched and development of medical treatments for those infected. Financial markets have broken back into record territory, and businesses are looking ahead to better times.
As investors, we can breathe a sigh of relief after a year that has tested the tenacity of many seasoned veterans. Those of us who have maintained discipline and stood our ground can take satisfaction in weathering a financial hurricane, while those who jumped ship may still be trying to make their way back to shore.
Financial downturns happen, and there is nothing we can do to prevent them. What separates successful investors from those who do not survive is the resolve we bring to the market.
Consider the different ways that cows and bison cope with storms that roll across the prairie. When cattle see storms approach, their instinct is to run away from them, prolonging the suffering as they gallop in the same direction as the rain, thunder, and lightning. Bison, on the other hand, run into storms, minimizing the danger by emerging from the back side much sooner than the hapless cows. The phenomenon illustrates a valuable lesson.
Through my 30-year career of managing clients’ wealth, I have seen many uncertain times and negative economic events, and I have learned that it is always better to move into the storm rather than stop moving, ride it out, or run away. The famous quote by Winston Churchill always rings in my head, “If you are going to go through hell, keep going.” In other words, move!
This COVID-19 crisis has been no different. Overnight, our high-flying economy was pulled to the ground, and Full Sail Capital’s entire staff was forced to work from home with their laptops, cloud connections and smartphones. As bad as the market seemed at the time, we did not run or take cover. We knew the storm would eventually pass, so we responded to the circumstances, reminding clients of the importance of discipline and diversification, and provided information they needed to make informed decisions.
While there were impulses to pull out of the market and come back when the pandemic was over, we encouraged clients to be patient because the turnaround was coming, and there would be more opportunities to create wealth in the market than on the sidelines.
When you are an investor, financial storms are inevitable, and some can seem unbearable, no matter how many you have weathered in the past. But it is important to remember that storms end, markets return, and wealth is created for those who stay the long-term course.
Smoother seas are always over the horizon.