To The Moon

If it feels like the market is moving faster than ever, it is!

Information moves faster, but so do companies.

AI was a pipedream five years ago, and now it’s driving trillions of dollars in value.

If you’re looking for the next hot thing, faster markets can be a great thing. But as a long-term investor, it can bring confusion to decision-making.

In these digital pages, I try to explain how I’m investing with a long-term focus using strategy and financial results, but sometimes that doesn’t translate to the performance I aim for because hype and short-term dynamics win the day.

Today, I want to show how the speed of the market has changed over the past century and why keeping our heads is more important than ever.

Everything Happens Faster

Yes, the market is moving faster than ever, but putting numbers behind it is a little wild.

Market crashes used to be measured in decades, not months. I’ll show charts for all of these time periods below, but look at the reduction in time from peak to bottom and peak to full recovery over the past century.

The Great Depression is probably the best-known bubble, but did you know the $Dow Jones(.DJI)$ (the key index of the time) took nearly 30 years to recover to the highs hit in the late 1920s? Even the crash took nearly three years to go from peak to bottom.

Post-WWII, the U.S. economy went on a great bull run (because the U.S. wasn’t destroyed in the war) that peaked in 1962. But then the market went nowhere for two decades!

Can you imagine a stock market that went sideways for decades?

The 1980s and 1990s were great, but that ended with the .com bubble bursting in 2000. And that crash lasted almost three years from peak to bottom.

But this is where things really started to change. It would take less than half the time to recover from the .dom bubble than it did from the Great Depression, and that compression continued less than a decade later with the Great Financial Crisis.

If you were of working age during this time, it seemed like the global economy would collapse on itself. Bills went through Congress over the weekend, the Fed took extraordinary action, and even with all of the destruction, it would take only three years for the $NASDAQ 100(NDX)$ to fully recover and a little over five years for the $S&P 500(.SPX)$ to recover.

The crashes in COVID (a blip) and the post-COVID drop in 2022 were even faster.

What can we learn from this?

While there were bubbles and crashes in the past, they’re happening even faster now. FOMO is very real, and chasing momentum can end in disaster.

$Moderna, Inc.(MRNA)$ , $Bath & Body Works Inc.(BBWI)$ , and $Devon(DVN)$ were three of the best-performing stocks in 2021, but have lost money since.

Remember when $Plug Power(PLUG)$ was going to push the world to “green hydrogen”?

We could talk about the boom and bust of crypto, SPACs, and more.

Over time, the surest way to make money and build wealth is to buy great companies and hold them long-term. Just buying and holding great companies like $Apple(AAPL)$ $Netflix(NFLX)$ $Microsoft(MSFT)$ $Booking Holdings(BKNG)$ was a recipe for success.

And buying while valuations are low puts the odds even more in our favor.

I’ll buy some more great companies at reasonable prices next month. They won’t make big headlines, and that’s OK. Over the next decade, I think they’ll do well as the market booms and busts around us.

I have a hard time seeing value clearly at the top or when FOMO is highest, so I over-index on staying away…for better or worse.

I’m much better at buying at the bottom and holding on for dear life long-term.

I think that’s a winning strategy no matter how fast the market moves.