August 14, 2009

Patience & History

"Teachers teach because they care. Teaching young people is what they do best. It requires long hours, patience, and care." - Horace Mann

As a child, I remember hearing this quote, and for whatever reason, it has always stuck with me. Being married to an educator, I have seen firsthand how educators must be patient and caring while spending their time and usually money on students. It is obviously a very honorable thing to be part of and see, and when the student succeeds, it makes it all worth it.

Thinking about patience, how patient are you with your investments?

When the market moves lower, I can see and hear people rushing for safety. The problem I have always had with that approach for educators is that as educators with pensions, most of you already have a very sizable safety net. This is not the same for "business people," so any advice to them may be somewhat different.

Over the past few weeks, I have received a few e-mails asking me about getting back into the market now since things have stabilized. Most of these individuals had been completely in cash because they were worried about losing money even though all of them were fairly young educators. The issue here is long term, long term, long term and diversify, diversify, diversify!

The stock market has moved up roughly 50% from its March lows, and the S&P index is up 13.95% for 2009. Most investors (whether old or young) should have had at least something invested during 2009.

Going back to previous posts of mine from January (2009 Investment Options for Your 403(b)), March (Current Investment Options), and April (Is History Repeating Itself? - Looking Forward on the Market) regarding the market and investments, the emphasis has always been on looking forward by looking back through history.

We teach our students by explaining to them what has been learned throughout history. Whether the subject is math, science, English, or history, the knowledge that we have gained to teach our students has been through a progression of time. For example, Archimedes and Pythagoras for math, Newton and Einstein for science, Shakespeare and Dickens for English, and well, everything for history.

The stock market and the economy are somewhat the same way. The market looks forward, unemployment lags, etc., etc.

One of the best minds we currently have working for us is Federal Reserve Chairman Ben Bernanke. As an academic scholar in the 1980's Bernanke studied The Great Depression from causes to effects and how the system could have behaved better. In fact, back in 2007, there was a blog from The Wall Street Journal, Real Time Economics, that discussed how Bernanke's past experience may help us in the future - Why Bernanke’s Great Depression Research Matters Today.

I mention all of these things not to discuss what you should have done earlier this year, but to explain how all of us can learn from this past market for future markets. My job requires me to learn from past successes and mistakes, so that I can do better in the future for my clients. I know as educators each of you also learn through the years about various ways to teach. Please use that same approach in other areas.

Remember the lessons of the past year for the future years. The market can be a great teacher in its own right.

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