Ring

The Lesson of the Ring

It has been told that King Solomon charged one of his servants to find a ring that would make a happy person sad when they wore it and, if a sad person wore it, they would become happier. When the servant told the wise king that he could find no such ring, King Solomon commissioned a jeweler to inscribe a ring with the saying “This too shall pass.”

This lesson is forgotten by homeowners and investors alike. Everyone knows the axiom “Buy low and sell high”, but few ever follow that advice. When a market is down, people panic and sell. When a market is high, they hold on too long only to see their investment spiral downward.

Without counting the downturn of 2020, there have, in fact, been 22 recessions in the US economy since 1900. Of those, the recession of 1929 (otherwise known as “The Great Depression”) lasted the longest at 43 months. Although we have no way of knowing how long this economic downturn will last, there is only one other pandemic induced recession during that time. The Spanish Flu was caused by the H1N1 virus and, like Covid-19, it is thought to have originated in an animal species before being transferred to humans. It is estimated that one third of the world’s population was infected causing 675,000 deaths in the United States and over 50 Million deaths worldwide. The Spanish Flu did, indeed, cause an economic downturn. That downturn lasted only 7 months. Of the 22 recessions on record since 1900, only a six-month recession in 1980 was shorter. Of course, we have no way of knowing exactly how long this downturn will last, but it is a good bet that “this too shall pass”.

Those who study history tend to find the right answers when a problem pops up. History shows us that neither good times or bad times stay with us for long. Opportunity is found by those who look for the light in darkness. Will you be someone who finds the light or will you be like most people who sell low and buy high?