For most of the last 9 1/2 years, the stock market delivered higher-than-average returns with almost no volatility.
That’s practically unheard of.
The tempest of rising and falling prices we’ve experienced over the last two months is the norm, not the near decade of placid seas.
At times like these, it’s important to think clearly, maintain some perspective and remind yourself why you own stocks to begin with.
I could point to charts and tables that show how a diversified stock portfolio outperforms everything else – bills, bonds, real estate, commodities and precious metals – over the long haul.
But consider portable coffee instead…
When I travel to Baltimore on business – as I do regularly – I don’t stay at the Four Seasons, the Marriott Waterfront or the spanking-new Sagamore Pendry.
I’ve tried them all, but I prefer the Inn at Henderson’s Wharf.
It’s right on the harbor. Everything is on one floor. (So there’s no waiting for elevators.) Freshly ground coffee is on offer in the lobby 24/7. There is a nightly wine tasting. And complimentary Grand Marnier and chocolates await when you return from dinner.
The problem is that Henderson’s is in Fell’s Point, while our offices are in the historic Mount Vernon district.
Since I’m in and out of meetings and – increasingly – video shoots all day, it’s not convenient to travel back and forth.
So I sometimes stay next door at the new Hotel Revival. It’s fine – but with one exception.
Hotel Revival doesn’t have coffee makers in the rooms. The café in the lobby doesn’t open until 7 a.m. And by that time, I’ve generally been up for three hours and have polished off half a pot of coffee.
I don’t start my day without varnish remover… ever.
I thought about this as I planned my trip to Baltimore last week and suddenly thought, “Wouldn’t it be great if someone made a portable coffee maker?”
I had never seen such a thing – or even heard of one.
But I went to Amazon and typed “portable coffee maker” into the search bar.
To my surprise, a slew of them came up.
I bought “Amazon’s Choice,” the AdirChef Grab N’ Go Personal Coffee Maker with black travel mug. It cost 22 bucks.
When it arrived, I couldn’t believe how compact it was. It’s about the size of a man’s shoe – granted I wear a size 12 – and tucks into an overnight bag with plenty of room to spare.
In less than a minute, it delivers a piping-hot 15-ounce coffee in a thermal mug. It is a small marvel of miniaturization.
What the heck has this got to do with the stock market?
I’ll tell you…
The free market is an astonishing thing: People knock themselves out night and day to create and improve products and services – including ones you didn’t know you wanted or needed – and deliver them quickly, efficiently and cost-effectively.
When economists talk about the wonders of capitalism, they generally emphasize faster communications, safer transportation, more powerful computers or new life-saving drugs.
Or they point to cutting-edge industries like cloud computing, robotics, sensors, artificial intelligence or genomics.
But how about a portable coffee maker that you didn’t know existed, costs next to nothing, is delivered in two days and keeps you from trundling out into the ice-cold Baltimore streets before sunrise in search of a cup of joe?
Our ancestors a couple of generations removed would look at our lives today – with all its laborsaving devices and everyday luxuries – as the realization of some utopia.
And we don’t just benefit as consumers. We benefit as investors.
With the click of a mouse – and a $5 commission – you can own a piece of any of thousands of the world’s most successful businesses.
Yes, their share prices gyrate up and down – sometimes for good reasons, sometimes for none at all.
But the best of them keep delivering products and services that are better, cheaper or longer-lasting.
These firms continually upgrade your lifestyle, without your even asking.
They also allow you to achieve a measure of financial independence, so that you can do what you want, where you want, when you want, with whom you want.
That’s not nothing.
And it’s something to bear in mind when stocks act badly, as they do from time to time.