Some Thoughts About Pain
Pain is one of the universal facts of our existence. We’ve all experienced it. And pain is not just physical; it includes psychological and emotional pain as well. Reflect for a moment on your most painful experiences. Vivid scenes often come to mind, as do the sights and sounds in great detail (thankfully, our recollection of the actual pain is greatly diminished over time). Is it any wonder that we go to such great lengths to avoid it or to get relief from it?
Not all pain is bad, however. Try to imagine life without it. Dr. Paul Brand (1914-2003) was an early pioneer in the study of leprosy (Hansen’s disease) and reconstructive hand surgery. In 1993, Dr. Brand published a book (with co-author Philip Yancey) entitled Pain: The Gift Nobody Wants. In it, he wrote: “Pain is not the enemy, but the loyal scout announcing the enemy.” In other words, pain protects us. Leprosy, which can now be cured with early detection, was discovered to be a bacterial infection that caused nerve damage. Leprosy sufferers, deprived of pain’s early warning system, would unknowingly injure themselves, often leading to the crippling of their hands and feet.
I was also reminded of another truth about pain during a recent course of physical therapy sessions to treat a case of rotator cuff syndrome. I have the utmost respect for physical therapists, having been a fairly frequent user of their services over the years. Because I go to PT due to some kind of pain somewhere, it is apparently natural for me to think that I can judge the success of treatment by the gradual reduction of that pain. But this is wrong. My pain level during treatment is only one factor in the ongoing assessment, and not the most important factor to the therapist. My feelings of dejection and discouragement due to ongoing pain during treatment were therefore unjustified, such that, as I write this, I am now completely pain-free.
By now you must be wondering what all this talk about pain has to do with investing. It is simply this: stock market volatility and declines, such as we saw during the last quarter of 2018, can be emotionally unpleasant, upsetting, or downright painful for many of us. But unlike Dr. Brand’s observation, this kind of pain may not necessarily point to something worse to come. It is better understood as something that naturally comes along with the ultimate achievement of our long-term investment goals, like my experience with the physical therapist.
Over long periods of time, equity markets historically tend to go up more than they go down, but they do go down sometimes. Over shorter time periods, investors can feel whipsawed by highly volatile markets. But these facts don’t change the fundamental, underlying function of stock markets as places where ownership shares in well-run, profitable, growing public companies are bought and sold, and where fair value is ultimately determined. Participation in this wealth creation process, the fruit of capitalism and free enterprise, is where investment returns come from in the long run.
The volatility risk that we experience can be thought of as the price of admission. The potential long-term returns we hope to capture from the stock market always come with risk in the form of “painfully” volatile stock prices. It has always been that way historically and we have no reason to think it will be any different in the future.
John serves as Chief Investment Officer for Coyle Financial Counsel and is responsible for overseeing the investment process. John’s prior experience includes managing institutional fixed-income portfolios for corporations, pension funds, non-profit organizations, and foundations at several large, global asset managers. With more than 20 years of institutional investment experience, he is energized by helping individuals understand the role investing plays in meeting their long-term financial goals.
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All information is from sources deemed reliable, but no warranty is made to its accuracy or completeness. This material is being provided for informational or educational purposes only, and does not take into account the investment objectives or financial situation of any client or prospective client. The information is not intended as investment advice, and is not a recommendation to buy, sell, or invest in any particular investment or market segment. Those seeking information regarding their particular investment needs should contact a financial professional. Coyle, our employees, or our clients, may or may not be invested in any individual securities or market segments discussed in this material. The opinions expressed were current as of the date of posting, but are subject to change without notice due to market, political, or economic conditions.