A Whole Lot Of Nothing

A whole lot of nothing is what has been happening in the market lately. There has been plenty of news some of it truly eye-popping like the LIBOR scandal, the JPM trading loss and the launch of an ETF that will not lower your cholesterol or whiten your teeth (joke from the other day).

This is a handy reminder of the extent to which patience must be a cornerstone to long term investing. You know how when you look at a ten year chart of some stock that is up a bazillion percent in that time and you think why didn't I own that you also see some stretches where the stock got hit pretty hard yet there it is up a bazillion percent for the ten years.

For the last few weeks or so the market has been churning around the same general area without going far in either direction. Any sort of reasonably diversified equity portfolio has probably had a similar result. For people who pay attention to markets and their portfolios the combination of big news and little to no net progress could create a level of impatience and cause trigger fingers to get itchy.

At a moment of reasoned thought everyone will tell you well of course investing requires patience but that can be very difficult to remember at a time like this where markets don't seem to be making any progress but the news seems particularly bad or "different."

One useful idea here is that you are very unlikely to remember much about the summer of 2012 from a market standpoint; without looking, how'd you do in the 3rd quarter of 2010? A few years from now you might read something that mentions the JP Morgan trading loss and the London Whale and have to remind yourself if it occurred in 2011, 2012 or 2013.

It is also useful to remember your real goal in investing. For most people it is simple to have enough when they need it. Someone who is 35 probably won't need to draw on it for quite a while but someone who is 60 who might need to start drawing on it soon will (hopefully) need to draw on it for many years. I think this makes the argument that all ages need to employ patience with their investing.

An example is how bear markets tend to start which is that they rollover slowly for several months (look at the charts for 2000 and from late 2007). This is not to say you can ignore when the fundamentals of a stock you own change but does anyone think that the LIBOR scandal effect Apple's earnings? Excluding financials what is the visibility for the fundamentals of any of your holdings to be effected by the LIBOR scandal? Hopefully you have some sort of process discipline and you stick to it without growing impatient or over trading your account.