There was a day, in January or maybe February, where a bunch of Spaceship-pers were sitting around at lunch, talking about coronavirus. Most of us weren’t sure what to make of it. Little did we know how quickly things would start to change, for everyone.
Working from home, social distancing, quarantine — these were all surprises to the system.
But perhaps the biggest surprise of all was the stock market. After about a month where we saw low after low, it turned around in late March and has been steadily climbing since. In fact, most indices have been breaking records in recent weeks.
Which is why it was no surprise to wake this morning and see that stocks, and in particular, tech stocks, have undergone a bit of a readjustment. Markets go up and down; it stands to reason that after months of up, up, up, the rally was going to run out of steam.
So, you’re probably wondering: what does this mean for Spaceship?
We believe in the value of long-term investing. We won’t make any fundamental changes to what we’re doing; as we said, we know markets go up and down at times.
When it comes to our Spaceship Universe Portfolio, we’ll continue to assess the stocks in that portfolio against our Where the World is Going criteria. That is, we’ll consider whether we believe they will continue to benefit from future trends and are defensible. If we feel a company no longer has long-term value, it will be removed from the portfolio (and we’d let you know).
For our Spaceship Origin Portfolio, things are a little different.
If a company moves in or out of this portfolio, it will be because its market capitalisation has changed, not because we have made the decision to buy or sell it.
That’s us. Now, what does this readjustment mean for you?
When it comes to investing, it can pay to hang in there.
We have a minimum suggested timeframe of five years for anyone holding an investment in a Spaceship Voyager portfolio because, generally, when equity investments are held for longer periods they tend to exhibit lower volatility than those held for shorter periods. (Although, naturally, past performance is not a reliable indicator of future performance.)
We also know that can be easier said than done when the market drops, but long-term investors tend to live by the “time in the market, not timing the market” philosophy for good reason — because by trying to pull out of the market on a bad day, you could also end up missing out on a good day.
J.P. Morgan Asset Management’s 2020 Retirement Guide has some insight into this.
Over the 20-year period from 3 January 2000 to 31 December 2019, if you missed the ten best days in the stock market, your overall return was cut in half!
To be more specific, if you put $10,000 into the S&P 500 Index, and remained fully invested over the entire period, you’d have ended up with $32,421. If you had missed the ten best days, you’d have ended up with $16,180.
All this to say, it can be worthwhile to stick it out. Some people even use market drops to put in more money and potentially supercharge their investments.
Having said all that, you should absolutely make your own decision, a decision that suits your personal financial situation. Again, past performance is not a reliable indicator of future performance.
