Looking Back at a Bad Day in the Stock Market

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In this episode of Market Foolery, Chris Hill explains why a solo episode from Aug. 6, 2019 titled “This is the business we’ve chosen” is making a return appearance.

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

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This podcast was recorded on April 21, 2021.

Chris Hill: It’s Wednesday, April 21st. Welcome to Market Foolery. I’m Chris Hill and for the second day in a row, it’s just me. I know, you are like, wait, what about Netflix, you’re not going to talk about Netflix? I’m not. But there is a 100% chance Netflix is going to be one of the first stories discussed on Motley Fool Money this week so check that out this weekend. Speaking of which, Nell Minnow is going to be the guest. I talked with her yesterday about Archegos Capital and that whole mess, and also got her picks for the Academy Awards on Sunday. For today, something different. 

Earlier in the month, Brian Feroldi, who you’ve heard Brian on this show, you’ve heard him on the Industry Focus podcast, he posted something on Twitter asking his followers, what are the best podcasts or talks that you think should be listened to over and over again? I got excited when he posted that because I thought, “Wait, other people do that too?” I’ve done that for years, but I just thought I was being weird listening to the same interview over and over again. It never occurred to me that anyone else was doing that too. One of them for me is an interview that Marc Maron did on his podcast with Anthony Bourdain in 2011. I didn’t listen to it when it first ran, but when Bourdain died in 2018, Maron republished the episode. It’s about 70 minutes long, and I’ve probably listened to it 25 or 30 times, at least. 

Bourdain talks about getting into cooking as a teenager and becoming a chef, struggling with addiction, and his whole second career as an author and a travel documentarian. For me, listening to it provides good reminders about things like professionalism and using food as a way to be more open to different people and different cultures. Anyway, a couple of Brian’s followers on Twitter wrote that one of the podcasts they’ve listened to multiple times is a solo episode that I did two years ago, which is very flattering so thank you for that. I thought I would run it again because it’s about mindset. On Thursday of this week, The Motley Fool is hosting an online event for members of our services, and part of that programming is oriented toward mindset. Yes, there will be interviews with company executives and lots of presentations about a whole bunch of different stocks, but part of it is going to be about mindset. 

This episode fits in that category because it’s from early August 2019. The context that’s important to know is that the day before I recorded this, the market tanked. It was the first dramatically bad day in a while. At one point The Dow was down more than 700 points and it just seemed like one of those times when it was appropriate to take a little break, step back so we could all just catch our breath.

The 2019 podcast starts here.

We’ve got to talk about what happened on Monday. People are asking me, what do you think? Getting texts from friends of mine. I think a few things and so I figured I would just share them here. How are you doing by the way, are you all right? I know the market’s moving higher today, but yesterday, my goodness, that was a little jarring, […] it? Worst day of the year for the market, at one point The Dow was down 767 points. CNBC rolled out their prime-time special, Markets In Turmoil. Which if you haven’t, I don’t know if you watched it or not, but you got to just spend a minute and look online and find the logo because the logo’s amazing. It’s got this blood-red color scheme, and in the background of the promotion that CNBC came up with is a rampaging bear that looks like it just inhaled a pound of cocaine. 

This morning, I went for a run to clear my head. What do you do to clear your head, by the way, you got something, right? I hope you do. Everybody’s got to have something to clear their head. I don’t care if it’s meditating or yoga, hitting the gym, taking a walk, doing stuff around the house, painting, whatever. You’ve got to have something. I’m not a mental health professional but I’m just saying, if you can’t answer the question, spend a little time and figure out what is the activity that helps you clear your head. I’m running this morning, I’m thinking about the market yesterday and all of the media coverage. By the way, I’m not knocking CNBC for doing a prime-time special, I’m not knocking the Washington Post for putting the story on the front page above the fold, but I realized when I was running, the thing that bothers me about all of the attention from days like Monday, all of that media attention is that it brings all of the non-investors out. You know who I’m talking about, the people that you work with, your family, your friends, your neighbors, the people who are not investors. They’re not interested in stocks. They’ve decided it’s not for them. They don’t have the time nor the inclination or the stomach to invest in individual stocks, and that’s fine. All of that is fine, but when you have a day like Monday the non-investors start talking about investing because it’s in all the headlines. It shows up in their Twitter feed or on Facebook, and then the non-investors start talking to us because we’re investors. We are like, “Rough day in the market. Did you see that, how’s your portfolio doing?” 

Some of them, not all of them, but some of them they’ve got that little judgmental edge in their voice, or it’s their body language, just that little judgmental tone that’s just like, “Yeah, that’s why I don’t invest. It’s crazy out there, stocks will burn you. I guess my strategy of rolling over 12 month CDs isn’t exciting, but I am getting that 2.5% return guaranteed my friend.” I like the non-investors in my life. Hopefully, you like the non-investors in your life, I just don’t want to hear from them on days like Monday because I am trying to focus. The non-investors are not helping in that situation. Monday, let’s recognize a couple of things about Monday. First, the financial media is going to do their thing. As Foolish investors, Foolish with a capital F, we focus on percentages, not points. Points make a better headline.

A 767 point drop is a much better, bigger number than the percentages. It’s much sexier for the financial media than like the Dow actually dropped 2.8%. Well, when you put it that way, that’s not as jarring. The second thing to recognize is, and you already know this, but I have to say it anyway, this is going to happen again. You don’t have to be afraid of it. You just have to be aware of it. Yes, it’s jarring. It’s jarring to people like me and I’ve been investing for 25 years, but it’s probably more jarring for those of you who have only been investing for a few years. I know that’s the case with a lot of you. I get the emails. The questions are great, but it’s always more fun to even just get a sense of who you are and where you are in your investing journey. For a lot of you, I know it’s early days. You’ve only been doing this for a few years and days like Monday are jarring. 

Earlier this summer, I went up to Boston to visit my mom, and then I drove up to Maine for a night to take care of some family business. The drive is about 3.5 hours. I’m sure when a lot of people think about Maine, they think of LL Bean or lobster or a lighthouse or the woods. There’s a lot of woods in Maine. The further north you go in Maine, the more the wildlife starts to outnumber the people. I grew up in a town called Waterville. When you drive north out of Boston on I-95, you get to New Hampshire. You’re in New Hampshire for about 10 miles or so, and then you cross over the border into Maine. You’re just staying on I-95 for about 120 miles until you hit my town. Now, for additional context, you can keep driving another 300 miles before you hit Canada. I’m not from a particularly big place, but you keep driving north and you really get into some small towns where the deer and the moose play. I don’t know if we have antelope in Maine. Yes, of course, I’ve seen moose. I get that question every now and then. Have you ever seen a moose? Yeah, sure. It’s almost like a rite of passage in Maine. 

Here’s the thing though; when you’re in Maine, you don’t need to be way up in the county to see a moose. In fact, when I was driving this summer right after I crossed the border from New Hampshire into Maine, there was a big sign on the side of the road that said warning, moose crossing, and it had a silhouette of a moose. I was on I-95. I wasn’t way up north in the woods. I was on the busiest, widest stretch of the highway in Maine and already there’s a sign saying watch out for moose. I wasn’t afraid. It was a sunny day. I had good visibility, the sign was just a reminder. Be aware of your surroundings and act accordingly. That’s what Monday was for us as investors, it’s a reminder that days like this happen, they will continue to happen, you just have to be aware and act accordingly. Warning, moose crossing. Seriously, what did you do yesterday after you saw the news? Did you panic? Did you go shopping? I didn’t do anything. I just didn’t do anything with my portfolio. I know some people who did some shopping. They got a watchlist, they got a little cash, and they said, if someone is going to sell shares of that company, that business that’s the same this week as it was last week, someone selling shares and I can buy them for 5% less, I’ll buy them. By the way, I’m not making light of anyone who got rattled yesterday. It’s natural. It’s not fun. It’s not fun to have a day like that. It’s natural to have that feeling in the pit of your stomach when every single stock in your portfolio is going down. 

But another thing I was thinking about when I was clearing my head this morning was The Godfather Part 2, which is one of the five greatest movies of all time. If you haven’t seen it, put it on your list. For those who haven’t seen it, the central character in the Godfather movies is Michael Corleone, He’s played by young Al Pacino. One of the great scenes in the Godfather Part 2 is a conversation between Michael Corleone and a man named Hyman Roth. I’m not going to spoil the movie or go deep into the weeds here, but in a nutshell, Michael Corleone is the head of a mafia family and Hyman Roth is a businessman who is older than Michael. He’s been around for a long time, involved in various, let’s just call them mafia adjacent business endeavors. They’re having a conversation and at one point, Hyman Roth is offended by a question that Michael has asked him and he considers the question to have crossed a line. Hyman Roth proceeds to essentially lecture Michael Corleone. He’s played by the late great Lee Strasberg who got an Oscar nomination for playing Hyman Roth. One more reason to watch the movie. He takes a moment and he says to Michael, “When I was growing up in New York, I knew this guy who was younger than me and we worked together and as much as anyone, I trusted him, I loved him. Later on in life, he had this crazy idea to build a city in the desert for GIs who were stopping over on their trips to the West Coast, and basically, this guy invented Las Vegas. He was a man of vision and guts. Somebody had him killed and nobody knows who gave the order. When I heard the news, I didn’t get angry. My friend was headstrong and I know that he rubbed some people the wrong way. When he turned up dead I let it go and I said to myself, “This is the business we’ve chosen.” I didn’t ask who gave the order because it had nothing to do with business.”

That, my friends, is the last thing I think about Monday. I’m not comparing investing in individual stocks to a lifetime spent running a mafia family, but self-awareness of our endeavors is both important and instructive. This is the business we’ve chosen. You and me. We have chosen to invest this way because we know it’s the single best way to grow your wealth over time. We choose to invest this way, a Foolish way, because we’re not Wall Street traders. We’re not investing in businesses for the next three months, we’re investing for the next three decades, and we’re investing together, so yeah. Days like Monday are not fun and they can feel isolating, but that’s the cost of doing business. Ultimately, we’re going to be OK with that because we know there are more days when the market goes up, and we’re in this together. If you need a break, take one. If that means ignoring the news or not looking at Twitter, or even taking a break from this podcast, that’s fine. Do what you need to do to clear your head. When you’re ready, come back. We’ll be here. 

The Motley Fool will be here with all of our investing services. Fool.com will be here with articles and analysis, 24/7. We’ll be here with our podcasts. I will probably most likely be here in this studio because this is the business that I’ve chosen. No stocks mentioned today, so I’m going to skip the usual disclaimer. The show is mixed by the amazing Dan Boyd. I’m Chris Hill. Thanks for listening. We’ll be back tomorrow!