“Everyone has a plan until they get punched in the mouth”. When the volatility peaks and we’re on the verge of a market crisis you’ll see plenty of articles using this Mike Tyson quote and it gives me the shits.
With the Trump administration slapping tariffs on everything – even exports by penguins – and sending markets into a spin, I am certain we will see this quote used.
I started boxing when I was eleven. I had my first amateur fight at the age of 12. I made my parents get Foxtel so I could watch boxing. Before that, I would send my dad to his office with a schedule of what fights were coming up and his assistant would tape them for me on VHS. The first pay-per-view I bought with my pocket money 25 years ago was Prince Naseem Hamed vs Augie Sanchez (it did not fare well for Augie).
Back to the quote, why does it give me the shits? Because everyone uses it out of context. Tyson said this at a press conference in the lead-up to his first fight with Evander Holyfield. Evander was an absolute beast – check out his wars with Bert Cooper, Riddick Bowe and Dwight Muhammed Qawi. And guess what. Evander had a plan, he got hit in the mouth, stuck to his plan and soundly beat Tyson. I guarantee you everyone using the quote has never seen the fight. Here’s a link.
The S&P 500 was down 4.6% last night. The market has hit you in the mouth. Do you have a plan?
Planning for this moment now, when you are already invested is too late – just like trying to make a plan when you are looking up from the canvas seeing the black lights (a term for being knocked out and also the name of an amazing book on the business of boxing).
Your best defence against the volatility:
- Remember your original investment plan. You made the right decisions. Your portfolio is diversified, you have a mixture of defensive and growth assets in line with your timeframe. You’re adding your savings along the way. Remember you expected this.
- Be patient and look for positive examples. What would Warren Buffett or John Bogle say right now? These moments test us, but how you react is incredibly important. As Warren Buffet said, “The stock market is a device for transferring money from the impatient to the patient”. This quote can be applied to right now, but also when you first invested. Did you invest in line with your timeframe or were you impatient?
- Step away from news sites and your brokerage account. I implore you to turn these off. Brokers benefit when you transact. News sites don’t get rewarded when your portfolio increases – they are paid to make you click. Fear is a good way to do that. Instead, click on this. It’s STW, the oldest ETF on the Aussie market. Scroll down and check out the chart, and then come back to me and tell me when the best time to sell would have been.
- Finally, it’s ok to talk to others about it but talk to the right people. Your financial adviser if you have one, or like-minded people. The Rask Community is a great place to find long-term thinkers. You can always book a call with me too.
Finally, don’t abandon your plan and if you have additional cash or are continuing your saving, set up a dollar-cost averaging strategy. That’s what I am doing. I deployed cash for myself and will continue to do so for my son’s account. If you are well diversified, holding is the next best option.
And please, for my sake, don’t use that quote out of context again.
