On Jan 23, 1960 Don Walsh and Jacques Piccard stood atop a deep-sea submersible vehicle floating in the middle of the Pacific Ocean. Their goal was to take this craft, the Trieste, to the bottom of the deepest point in the ocean: The Mariana Trench. That day the ocean was especially rough, and the submersible vehicle was floating in a sea of sharks who had come to examine the craft. The two prolific, and largely unsung, explorers had to decide whether to continue towards their goal and climb inside the Trieste or abort the mission and possibly lose their one chance to venture to the bottom of the ocean. The expedition was split. Part of the crew spoke up against continuing the expedition while part of the crew advocated to continue. At that moment Don Walsh and Jacques Piccard sought the council of the man who had built the Trieste-John Michel; in that defining moment his answer was an unequivocal-Yes. Proceed with the mission. The Trieste could handle the rough seas.
With the market volatility these past weeks we’ve seen vast amounts of outflows from passive ETFs. ETFs that in theory should be utilized and bought in a disciplined, rules based, properly allocated portfolio. When we see a 10% correction in the market, investors should be prepared in advance on how they are going to act in such a situation. If you are nearing retirement, your portfolio should be invested and allocated so that a pullback in the market isn’t going to materially change your financial security. If you’re in your 20’s and 30’s, you should be piling in as much cash into your portfolio as is responsible when a downturn occurs.
But that isn’t what we saw. We saw concern and angst among many investors, old and young. Investors let their emotions get the best of them, and they pulled their money out of ETFs at rates not seen in nearly a decade. When drawdowns, corrections, and bear markets occur, investors need their own John Michel. Investors need proper expert, rational, and unemotional advice. We can all take a note from Don Walsh and Jacques Piccard, two men who prepared diligently for contingencies and black swans. We would do well as investors to mimic their resolve to continue forward towards goals. When the rough seas of market volatility and bear markets cause you to pause and doubt the path before you, will you block out the noise of the financial pundits and have the faith to continue forward?