Today marks the 10 year anniversary of the bottom of the US Stock markets during the financial crisis. From a market perspective, it has been a crazy 10 year period that has had many hiccups along the way. Rather than be another source of market history over the last 10 years, I wanted to share a very personal experience of mine from that time period. The point of this note today is to shed light on the fact that even when we make decisions that are well thought out and based on sound logic, luck (or unluck) can play a large role in outcomes. Something that is also important to note – when I initially set out to write about my experience my memory told me the events below happened on March 9th, but when I went back to confirm the actions I took, they actually occurred several days before on March 3rd. I point this out to offer full transparency, and also as another example that our own minds can play tricks on us!!! (Maybe Roger Clemens & Brian Williams did misremember???)
Personally I will always remember the day the market bottomed during the financial crisis, Monday March 9th, 2009. On this day the S&P 500 was down 54% from the peak in October 2007 and many individual companies shares were down more than that. That Monday I had a vision that today was the day to buy, so I made a purchase of Warren Buffett’s company Berkshire Hathaway (not to be too nerdy, but I bought the B class not the A class). I think I can safely say this will be the single best timed investment I have and will ever make in my life. This is where luck comes in…why did I buy that day? Certainly it was not because it was easy to do – far from it given all the fear and headlines in the news. The trust is there was a perfect storm of factors. Over that weekend I had received a small tax refund and didn’t have an immediate need for the funds (this will come into play later). I had also finished reading the auto biography The Snowball - Warren Buffett and the Business of Life. This is also important to the story as Mr. Buffett has made his fortune (and has a ton of great quotes) on buying great companies at discount prices and I too was convinced that I could be Warren Buffett! Lastly this date is very near my birthday, and I thought to myself I am going to give myself a present and buy stock in the company that’s run by the single greatest investor of all time and I’m going to buy it at a fire sale price and - most importantly I WILL NEVER SELL IT. Warren would have been so proud.
Never, as everyone knows, say never. Fast forward several years and in April of 2012 it was announced that Buffett had prostate cancer. He was 81 at the time (thankfully he’s still with us today) and was expected to make a full recovery. On a macro level it made me question how this company would continue to run as well as it had for all these years if its founder (GOAT) was no longer running the company. On a micro level my wife and I had 2 young daughters and all of the new financial responsibilities that come with them. So I made the logical decision to sell (not that very day but within weeks of the announcement) based on the information that was available. Since that time the company’s shares have more than doubled, and Buffett and his longtime partner Charlie Munger are still running the company, and offering up wonderful quotes.
Here's where the “what ifs” come in. The easy one is what if I didn’t sell it then, it would be worth more than 2 times what I sold it for! (I’m so stupid!). Perhaps this is placating to myself, but the ones I like to think about are; what if my birthday was in January and not March and I bought it at a much higher price and then it dropped roughly 30%, would I have then sold it at the bottom out of fear? What if I hadn’t done my taxes until April (the market had a very rapid increase from the bottom)? What if I hadn’t sold, but the added financial stress of life with two young kids put additional pressure on my marriage (full disclosure I don’t recall what we used the funds for – diapers would be a good bet)? There are many more what ifs – as there is with so many decisions we make.
Anyone reading this likely has had similar experiences, maybe not with investing but perhaps in another area of life. We’re constantly forced to make decisions based on imperfect and incomplete information and we hope we can make the best decision based off of the information at hand. Personally I have come to accept that fact that luck (or unluck), which is largely out of our control, is part of our lives. Sometimes our best is all we can do, and as Buffett would say “know what you don’t know”.
Thank you for reading this, and if you enjoyed it feel free to ask me about a few of my other investing "what ifs".