Everyone is hurrying, scurrying, and wrapping up the work week to enjoy what signifies the beginning of the summer season -- Memorial Day weekend. Americans are in such a hurry to celebrate, we begin summer almost four weeks before nature does.
First observed on May 30, 1868, Memorial Day is a time to remember those who have died in our nation's service. The origins of the holiday have been traced to a group of Southern women who, during the Civil War, decorated the graves of both Confederate and Union soldiers fallen in battle. (Remember when Memorial Day was called Decoration Day?) Unfortunately, the patriotic nature of the holiday has, to some degree, metamorphosed into a celebration of barbecuing.
It would be nice, however, if we all took a moment on Monday to honor the soldiers who have died to preserve freedom. Our lives are so filled with the possibilities bestowed on us by this freedom that we take for granted the luscious richness surrounding us. Too often, we focus on negative occurrences, especially when the stock market is struggling under the claw of the bear.
Freedom matters. Freedom to pursue our visions of prosperity through the vehicle known as the stock market. The path to financial freedom, however, will not be painless. To become better investors, we all have lessons to learn. No pain, no gain, right? Unfortunately, having an awareness of the potential of financial loss is a lot easier than actually experiencing it. This is a lesson many new investors are first beginning to learn.
Long-term investing holds the key to our long-term financial success; but becoming a worried victim of short-term trends that generate investor anxiety misses the whole point of Foolishness. If investors can't enjoy the prosperity in their lives because the stock market is going down, the prosperity hasn't really been incorporated. And prosperity, after all, is important to Fools. We like to live life to its Foolest!
This weekend, Fools won't be among those languishing in remembrance of stock prices sacrificed in service to Alan Greenspan's inflation-preventing tactics. Fools will be reveling in the joys of smiling friends and families, street fairs, and grilled comestibles.
Sure it's uncomfortable watching the air get squeezed out of our financial assets. But, every investor must remember that market sentiment will not always be bullish. It's imperative to anticipate the possibility of a period when stock prices are flat or moving downward. These days, anticipation isn't even necessary, as everyone is feeling the fallout from the downward trend.
The secret to success in the market is to have a long-term horizon. Over the long-term, the direction of the market has been the same -- and that's up! The S&P has an average long-term annualized rate of return of 11%. By having a timeframe as far into the future as individually reasonable, we can view the wars between the bulls and the bears with the perspective that it's merely the nature of the beast -- or beasts in this case -- and enjoy the blessings of our lives while circumventing the emotions that a volatile market asserts on our well-being.
On Memorial Day in 1884, Oliver Wendell Holmes Jr. spoke the following words, which not only capture the essence of the current holiday but also speak to the heart and soul of the Foolish investing journey. He said:
"So, to the indifferent inquirer who asks why Memorial Day is still kept up we may answer, it celebrates and solemnly reaffirms from year to year a national act of enthusiasm and faith. It embodies in the most impressive form our belief that to act with enthusiasm and faith is the condition of acting greatly. To fight out a war, you must believe something and want something with all your might. So must you do to carry anything else to an end worth reaching. More than that, you must be willing to commit yourself to a course, perhaps a long and hard one, without being able to foresee exactly where you will come out. All that is required of you is that you should go somewhither as hard as ever you can. The rest belongs to fate. One may fall at the beginning of the charge or at the top of the earthworks; but in no other way can he reach the rewards of victory."
Foolish investing requires enthusiasm and faith, believing in the ultimate results, and wanting it with all your might. Foolish investing requires a commitment to stay the course, not knowing exactly where you'll come out. Eventually, victory will be yours.
That's what matters.
Now... how do you like your burger?