Musings after too long

It’s been a long time since I have written. In fact, it’s the longest break since I started writing. When the kids were little I used to do a lot of my writing at the weekend. I didn’t spend my days as a glorified taxi driver back then. I know that all parents of older kids will appreciate this - and I am sorry for you parents of little kids to have to hear this – but parenting does not get easier.

A mother of older teens recently said to me ‘little people, little problems; big people, big problems’. That has become my mantra! But it’s not even about problems, per se. It’s just that they become a bigger demand on your time as they get older.

I remember 7 o’clock rolling around and collapsing on the sofa, exhausted with a large glass of wine. When they are little every minute can feel full on. But now it’s still going on at 9 o’clock. The homework that hasn’t been done, or the school drama that they want to tell you about as you are trying to crawl into bed yourself.

And that’s to say nothing of the running around – we have one swimmer and two football players. And again, I know so many of you know this, because you are living it too. Our swimmer has just committed (off her own back, because she loves it) to 7 swimming sessions a week. Of course it’s a huge commitment for her – she’s the one who actually has to swim, but we are going to put some serious driving miles in at some seriously ungodly hours.

I do momentarily ponder getting someone to do the driving for us. But those minutes with them, often alone in the car, are precious. I don’t want to give those up. In a few years they will be grown up and how we will wish we had a kid to drop at the pool or football pitch.

So, although it’s not an excuse for not writing as much as I used to, it definitely is a reason that I don’t get to sit, quietly and put pen to paper.

Which frustrates me because I have so much in my head all the time, so many ideas and thoughts that I want to share.

So, here follows a few musings.

Charlie Munger died last month, just short of his 100th birthday. Charlie was Warren Buffett’s partner. Jason Zweig wrote a wonderful piece on him in The Wall Street Journal. “No equal business partner has ever played second fiddle better than Charlie Munger.”

He was witty and wise. He, like Warren, had been investing longer than anyone else alive. His principles and lessons were timeless. He lived through wars and multiple business cycles, market booms and busts.

He was a man of great morals and values. His money never seemed to get the better of him – he always controlled his spending, perhaps as a child of the Great Depression there were lessons that could never be unlearned. Somehow he avoided envy and resentment, despite the fact that at $2.6 billion, his fortune was a fraction of Warren’s $120 billion. He seemed happy to let Warren have the limelight, content with his relative anonymity. His famous line during Berkshire Hathaway shareholder meetings was, once Warren had finished talking, ‘I have nothing to add.’ He remained intellectually curious and active until the end.

One of his most famous quotes was “if you are not willing to react with equanimity to a market price decline of 50% two or three times a century you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get compared to the people who have the temperament, who can be more philosophical about these market fluctuations.”

During Charlie Munger’s lifetime, the S&P was cut in half (or more) five times. He lived through almost 20 bear markets. Despite that, the S&P 500 went from 9 to 4700. Charlie knew a thing or two about equanimity.

It’s a wonderful word. Not one I use very often.

It’s defined as a calmness and composure, particularly in difficult situations. It’s related to resilience, but different. I think it sits higher than resilience. You need resilience to be equanimous, but reacting with equanimity gives us courage and strength to face the next set-back. That’s what we need to master the ups and downs, ebbs and flows, of being a shareholder in companies.

Nassim Taleb uses the term ‘anti-fragile’ which is similar. He explains that antifragility is different from resilience. Resilience gives us the ability to recover from failure. An antifragile person (or I would say, equanimous) increases his or her ability to thrive as a result of stressors, shocks and volatility. “The resilient resists shocks and stays the same, the antifragile gets better.”

And that’s what history teaches us. Each crisis and market crash should not be something just to be survived until the next one. We must emerge stronger and more resolute, safe in the knowledge that our essential thesis has once again been validated.

Look at the 50% fall during the Great Financial Crisis (S&P low of 670) and look at where we are now. Look at the COVID crash (S&P 500 low of 2300) and look at where we are now. Look at last year’s bear market (S&P 500 low of 3600) and look at where we are now.

In case you haven’t been watching (and I do tell my clients not to watch, so you are forgiven), where we are now is an all-time high (including dividends) for the 500 biggest, most soundly financed, enduring companies in America. The S&P 500 currently stands at 4750.

You made it through. You are resilient and equanimous.

So, let’s celebrate! The S&P 500 is up 24% this year. It’s been a wonderful year to be a shareholder of the great companies of America (and the world). These are the years’ you don’t want to miss.

Wishing all of you a wonderful festive period.