“If you can keep your head when all about you are losing theirs ... yours is the Earth and everything that’s in it.” —Rudyard Kipling, “If—”
Self-control, patience, discipline — when I was a boy, my father drummed the lessons of Rudyard Kipling’s famous poem into my head. Today I keep a copy in my wallet — and another on my office wall, in plain view. Kipling’s ode to stoicism isn’t just great life advice. It is a blueprint for keeping cool amid the noise and emotions markets often stir. Today calls for that cool. Yes, the past 13 months have tested Chinese investors’ resolve, but brighter days will come. Here is more old wisdom — from investing greats and beyond—to help you stay level-headed through this bear market’s duration.
“Don’t panic. The time to sell is before the crash, not after.” —Sir John Templeton
Not even legendary Sir John possessed enough prescience to sell before every crash. But he knew it was more important to avoid the post-plunge panic selling that sucks in most investors, locking in losses. Enduring a bear market isn’t the worst thing that can happen. Enduring one and not enjoying the rebound is. That is tough counsel, but with Chinese stocks down -46% from February 2021 highs, it is crucial.
“The stock market is a device to transfer money from the impatient to the patient.” —Warren Buffett
Most investors end up on the wrong side of this transaction, especially during bear markets. Long, grinding downturns eventually shake most out of stocks when the future looks bleakest — typically just when bull markets begin.
A wise man makes his own decisions, but an ignorant man mindlessly follows the crowd. —Proverb
Herd mentality runs wild in fear-filled bear markets. Make your decisions based on facts and logic — not groupthink.
“When the front of the exchange is full of bicycles, sell.” —Yang Huaiding
The late millionaire Yang knew groupthink also runs wild around euphoric market peaks. When latecomers flock to the exchange on bicycles, it is too late to buy.
Relatedly: “I buy when things are low and no one wants them. I keep them until they go up, and people are crazy to get them. That is, I believe, the secret of all successful business.” — Hetty Green
Born in the U.S. in 1834, Green was a notorious cheapskate who supposedly sewed paper securities into her dress for safekeeping — and extra warmth. A century before Buffett, she icily waded into stocks during fear-filled periods when crowds abandoned them — like now. Green died in 1916 with about $100 million — 16.4 billion yuan by today’s standards!
“Bravery is not the absence of fear, it is overcoming it.” — Mellody Hobson
Don’t kid yourself: Bear markets scare everyone — even the former chairwoman of Starbucks and current president of Ariel Investments. Successful investors aren’t fearless — but they don’t let fear dictate their decisions.
“[Bear markets] are going to happen. When they’re going to start, no one knows. If you’re not ready for that, you shouldn’t be in the stock market. I mean stomach is the key organ here. It’s not the brain. Do you have the stomach for these kind of declines?” — Peter Lynch
Lynch exemplified the proverb, “Face the unexpected and disturbing with calmness and fortitude.” The iconic fund manager didn’t let periodic downturns deter him — he dispassionately endured them, buying good stocks on the cheap and reaping the ensuing rebound.
“You don’t make money when you buy stocks. And you don’t make money when you sell stocks. You make money by waiting.” — Mohnish Pabrai
This money manager, author and Buffett disciple knows discipline is requisite to earn stocks’ exceptional long-term returns. As the proverb says, “Patience is a bitter plant, but its fruit is sweet.”
“What makes the task of fact finding so difficult is that in the stock market the facts of any situation come to us through a curtain of human emotions.”—Bernard Baruch
Baruch was a top tier investor in the late 19th and early 20th centuries. His words ring just as true today. You can’t eliminate your emotions — but being aware of them helps you manage their impact on investment decisions.
“To be uncertain is to be uncomfortable, but to be certain is to be ridiculous.” —Proverb
“Wait for the bottom!” “Be sure the rebound is real!” Downturns spur futile quests for certainty. But certainty carries a heavy price — bull markets’ biggest gains come early, when rock-bottom sentiment reigns. Embrace uncertainty — it is far better to buy too soon than too late.
“People generally see what they look for, and hear what they listen for.” — Harper Lee
This iconic American author wasn’t an investment pro, but she offered a succinct lesson on the “confirmation bias” that runs rampant in bear markets. Fearful investors see only scare stories confirming their pessimism — and dismiss positive signs that precede market rebounds.
“The investor’s chief problem—and his worst enemy—is likely to be himself. In the end, how your investments behave is much less important than how you behave.”—Benjamin Graham
The “father of securities analysis” was a behavioral finance expert before the field existed. Heed his warning against emotional decision-making.
“You make most of your money in a bear market, you just don’t realize it at the time.”—Shelby Cullom Davis
You don’t realize it — especially if stocks keep falling after you buy! But Davis, who built an investment firm and later served as U.S. ambassador to Switzerland, knew the bargains you buy during downturns pay off big-time later.
“No matter how tall the mountain is, it cannot block the sun.” —Proverb
Short-term obstacles are inevitable — and often insurmountable at the time. But over the long term, China’s diverse economy is too vibrant not to shine. Having faith in progress isn’t naive — it is historical realism.
Finally, another piece of counsel from Kipling: “Force your heart and nerve and sinew to serve your turn long after they are gone, and so hold on when there is nothing in you except the Will which says to them: ‘Hold on!’” Remember: Bull markets always follow bear markets — beginning when the future looks maximally bleak. Hold on to reap the next one’s full rewards.
Ken Fisher is the founder and executive chairman of Fisher Investments.
The views and opinions expressed in this opinion section are those of the authors and do not necessarily reflect the editorial positions of Caixin Media.
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