Thomas Paine (1737-1809) was the Revolutionary War pamphleteer and author of Common Sense who brought tremendous eloquence to the cause for American freedom (despite himself being born British). His famous, and most timeless, line speaks once again to investors in 2009: These are the times that try men's souls.
Indeed. If you are younger than 77 years old, at no point in your life have you ever come off a worse year for the Dow Jones Industrial Average. And it wasn't just the 40% market drop, either.
The volatility, too, was extreme. During the 56 trading days that followed Sept. 15 of last year, fully 26 of them featured market moves of 4% or greater. In the preceding 25 years, there were only 29 such days! And we're not talking "volatile" tech stocks like Google (Nasdaq: GOOG ) or Apple (Nasdaq: AAPL ) . Some of the bluest of blue chips -- Pfizer (NYSE: PFE ) , Disney (NYSE: DIS ) , and McDonald's (NYSE: MCD ) , for example -- all endured 10% price swings in a single day. When you combine dizzying volatility with a dispiriting once-in-a-lifetime drop, you, I, and Thomas Paine must all agree.
But while most educated Americans will recognize the line above, and might even be able to say "That's Thomas Paine," fewer will remember what words came after:
These are the times that try men's souls: The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands it now, deserves the love and thanks of man and woman. Tyranny, like Hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly: It is dearness only that gives every thing its value.
It is that image of "the summer soldier and the sunshine patriot" -- a glowing reminder of Paine's felicitous gift for the mot juste -- that catches my imagination. Yes, I know, I know: It was written about the Revolutionary War. It was in fact read to the soldiers of General George Washington, at his order, to keep their spirits up as they prepared for the Battle of Trenton.
But as I've always been an American second and a stock market guy first, this passage reads to me like the perfect words for my fellow Fools as we endure the Great Bear Market. Look again at the Paine quotation, and just substitute a few words here and there (e.g., for "service of their country" put in "stock market"). One can very easily see how Thomas Paine was also, across time, speaking to investors today.
The world is every bit as full today as it may have been then -- of summer soldiers and sunshine patriots. They buy stock in the best of times, or at least talk about it at cocktail parties. How long they hold their shares is less clear; some no doubt flee at the first sign of trouble (and yes, I realize that in so doing they would have saved themselves a lot of capital in 2008). But however long they hold it, they will all come to sell their shares, many at the very most dispiriting time -- at the very bottom, exactly when they should be buying. They will be selling their shares to their polar opposites, to the winter soldier and the gloom-wreathed patriot. To you and to me, if we're buying.
When Berkshire Hathaway (NYSE: BRK-A ) bought $10.6 million of The Washington Post (NYSE: WPO ) in 1973, Warren Buffett didn't sell when it fell 25% one year later -- because he's a winter soldier. Thirty-five years later, Berkshire's stake is now valued at $720 million.
At a Motley Fool member event held just a few months ago -- right in the thick of the selling -- I asked more than 200 people in the room how many had bought a stock in the past 60 days. I raised my hand, and I wasn't the only one -- approximately 200 others raised their hands along with me. What I realized that night is that I was surrounded by winter soldiers.
It isn't easy being a winter soldier. It doesn't feel fun at all. As I was pointing out on a radio show this week, investors get no quick instant gratification, as we usually do in other aspects of our life when we take a good action. It's different for investing. When, wreathed in gloom, you click that mouse or call in that order and buy, you won't find out for at least three years in most cases whether you did the right thing. No instant gratification. But as Thomas Paine once wrote, the harder the conflict, the more glorious the triumph.
As I write, we are in the midst of winter in every way. But the team at our new Motley Fool Pro service, headlined by a great winter soldier friend of mine, Jeff Fischer, isn't using just stocks these days. Members of Pro, which launched in October, have watched us write puts, write covered calls, look overseas, and, yes, even load up on some good ol' American stocks, too.
The focus of Motley Fool Pro is to help our members make money through learning and applying new tools for their investing. Our team has crafted a bag of new tricks designed to make money in up, down, or sideways markets.
If you'd like to learn more about Pro -- and how you can use these tools to improve your own portfolio -- just enter your email in the box below. The Fool has put $1 million of our own money for our team to strut its stuff. Winter or summer, sunshine or wreaths of gloom, we and our members are ready, and we are ready to welcome you, too.