We live outside of Seattle in the foothills of the Cascade Mountains. We’re in a more rural area, so it’s pretty laid back and quiet here in the land of horse farms. The landscape is gorgeous as we have the Cascade Mountains to the east and the Olympic Mountains to the west.
I got inspired for this post while riding my bike. We live along the Tolt Pipeline Trail, which is a large pipeline that supplies about 30% of Seattle’s drinking water by transporting it from the mountains into the city. Every so often I’ll get the bright idea to take my bike out there and start riding, but if you’ve ever been to the Pacific Northwest, you know it’s incredibly hilly.
The current market environment, with all its volatility and unexpected moves, reflects riding a bike around Washington.
I bought this bike a few years ago when we lived in Cleveland, OH. Now if you’ve ever been to the Midwest, you know it’s very flat and the roads tend to be laid out in a grid like pattern. While riding around Cleveland, I don’t think I shifted gears maybe more than two or three times each bike ride. It just wasn’t needed as there were very few elevation changes and the roads were quite predictable.
When bike riding in Washington, however, it seems I’m shifting my gears about every 10 seconds! The conditions change constantly with long, grinding roads winding through trees. You’ll have a huge uphill slog, then you’ll shoot down a 40% grade at 30 mph. There are the occasional flat levels where you can relax and take a breather, but in general the terrain is a lot more volatile than in the Midwest.
“When looking back, I feel the best stories you will have as an investor will come from looking back at these challenging bear markets.”
As I’m finishing my ride, I started cursing myself for picking this particular route that involves a huge, painfully slow uphill all the way back to our house. It struck me how closely this relates to our current investing environment. A normal bull market that we’ve all grown accustomed to is like riding a bike around Cleveland. You have a good routine, you have a general idea of where things are headed, and you just basically maintain.
But the current market environment, with all its volatility and unexpected moves, reflects riding a bike around Washington. There are times you have to work really hard, and times when you can ease off a bit. There are big uphill and downhill moves, and it’s almost like riding around with your eyes closed in a lot of ways.
Bear markets are challenging, but they provide considerable opportunities to learn and grow.
Of course there’s nothing wrong with this sort of environment. Riding a bike through this challenging terrain is actually a great learning experience. As much as I enjoyed riding around Cleveland, I’m really enjoying it in Washington because I’m stretching myself physically, mentally, and emotionally. I’m experiencing different environments and encountering opportunities to grow as a cyclist and as a human being. You might think I would prefer the Cleveland bike routes, being flatter and certainly less physically taxing. However, I’m very much enjoying the challenges of riding around these foothills.
I feel the same with investing. Bear markets can be difficult, they have a lot of volatility and uncertainties. But when I look back at my career, I have absolutely grown more in bear market cycles than in bull markets. These are the times when you really have to grow and learn and understand. When looking back, I feel the best stories you will have as an investor will come from looking back at these challenging bear markets.
RR#6,
Dave
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. Please see the Disclaimer page for full details.