Time is one of the most difficult things to deal with when markets are under stress. It seems to evaporate under the duress of expectations and the convenient assumptions they birth.

As such, we should expect that this year’s first set of earnings reported will be scrutinised like it was a ‘Spot the Detail’ competition at a forensic accountant’s annual symposium.

And the 2019 gauge will once again be set to ‘Sentiment Status’ where the value of the results are only as important as how people are made to feel about them.

Recency bias is real, folks.  And it affects almost everyone in some way or other. You can be quite confident that feeling gun shy following 2018's market action will not only be normal, but widespread.

Our very ugly 4th quarter will stand out like a fresh scar in the minds of investors, and the tendency has and will be to use recent experience as a baseline for what will occur in the future.

That type of shortcut to thinking can often be to our own detriment as history has proven many times over.

Also, there’s sure to be something that catches investors off-guard in 2019. It happens all of the time. And it won’t make sense, won’t match the news coverage, and it will defy expectations (except for a couple of experts who claim to have 'called it' somewhere in the past).

It could involve geopolitics, irrational market movements, corporate takeovers, huge gainers, big losers, or any number of crazy news, events, or price and performance events.

When it does arrive just keep in mind that things are never as good as they seem, nor are they ever as bad as they feel.

Given the ugly manner in which 2018 finished, there will be this constant pull on you to try and change something or make moves.

Anything rather than nothing, right?

Folks, it’s the "doing something" that makes investors feel better about themselves because it gives us the illusion of control, whether those moves are necessary or not.

And while frustrating, it’s during these times that patience is rewarded more than ever.

Expect plenty of “I told you so…” from the perma-bear community. After all, they almost deserve some after 9 years of telling us all it’s coming.

By example, the S&P 500 had its first down calendar year return after 9 straight years of gains. People have been predicting a huge drop every year since those gains began. And many of them will try to remind you of this fact under the assumption that they have perfectly timed the recent downturn.

Eh, wrong. They’re almost a decade too late, having missed all the growth in between.

In the end, accepting that the entire market will make you feel somewhat silly at times is probably productive. 

Any long-term investment strategy can and will make you feel foolish over the short-term.

This is especially true at times of market extremes, as the limits of your patience and discipline will almost certainly be tested.

Just like now.

And it’s just a question of time until it happens again.

Long-term planning and the Barbell Economy work well together, but they are the domain of patient investors keep an eye on the horizon ahead in the midst of all the noise. 

That requires ignoring those near-term market environments that make you feel dumb.

Mike Williams
Founder and Managing Partner of Genesis Asset Management, New York