Is This Time Different?

The legendary investor, Sir John Templeton, once said “The four most dangerous words in investing are: ‘This time it’s different.'”

Of course, each bear market feels a bit different than the last, so there is some truth in those words. After all, when was the last time we had an economic meltdown due to the onset of a global virus?

But to suggest that we may never recover is a stretch. Similar arguments have been made in the past. On Black Monday in 1987, US stock markets fell approximately 20% in one day. The aftermath of the crash created economic uncertainty and ignited comparisons to the Great Depression of 1929. Does that sound familiar to any news articles you’ve read recently? Three decades later, and it’s quite clear that 1987 was nothing like the Great Depression.

I’m not suggesting that this time couldn’t be worse. Of course, it could be. But if history is our guide, and it’s the only reasonable guide we have, the only rational conclusion is that eventually we will recover and move forward. We always have. The idea that this time will be different, while possible, is an irrational way to invest.

Disclaimer: Alex Voorhees and Reston Wealth Management do not provide legal, accounting or tax advice. This information is not intended to be a substitute for specific individualized investment, tax or legal advice. We suggest that you discuss your specific situation with a qualified investment, tax or legal advisor. The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) or strategies may be appropriate for you, consult your financial advisor prior to investing. No strategy assures success or protects against loss and past performance does not guarantee future results. You should consider the investment objectives, risks, charges and expenses of any investment carefully before investing. You cannot invest directly in an index.