When it comes to the realm of investing, there’s lots that’s outa our control. But right now it seems like absolutely everything is out of our hands. From the Fed’s battle with inflation to the energy crisis and the cost-of-living crisis (because one crisis just isn’t enough!) not to mention the massive debt levels we’ve got going on along with a looming recession caused by all this (surprise, surprise) it can feel more than a little overwhelming. 

You may find yourself agonising over the future. More specifically, when will inflation peak; what is the direction of interest rates and I guess the burning question we’ve probably all asked ourselves at some point (and have long discarded that view) as to whether all will return to ‘normal’. That once inflation cools down, we’ll get to go back down to a low-rate low-inflation environment. The kind that we’ve enjoyed, and become so accustomed to, for so long.

As a newbie investor (I started investing back in Nov 2020) I have spent a lot more headspace on all this stuff than I’d like to admit! I’ve spent hours pondering inflation. Wondering and asking myself whether this is the start of something way more sinister than any of us care to believe. What if this war in Ukraine will drag its feet for a lot longer than any of us had realised meanwhile the West (cough, cough Germany) gets battered from all these sanctions. I’ve thought about what all this would mean for the future of interest rates and I guess what I’m really thinking about is the future of my (mostly growth-oriented) portfolio! 

I’m wondering, what’s really in store for growth stocks?

See, low interest rates mean that it makes a whole lotta sense for us to be investing in companies who promise earnings later down the line. Low rates mean that investors are prepared to stick around for that because the opportunity cost (aka next best thing) is pretty low. But now, rates are on the rise and this is casting a massive shadow on these high-growth-no-profit guys.

Investors are no longer prepared to pay up whopper sums for future maybe’s. Hence the bubble burst. And valuations came crumbling down. Look at Klarna’s valuation: it’s down 85% and is now *only* worth $6.7bn. And trust me, there’s plenty more where than came from. Have a look at a few of covid’s winners and see where they’re at now. 

You may be thinking about ditching your growth areas altogether and park your capital in safe-ish areas from cash to bonds (though US gov bonds are down 13% this year so not exactly a good shout) and you could call it a day. Or you could try to time when and what and see if there’s that perfect moment to start pouring money into growth stocks, or stocks at all, again.

You can’t time a thing and much is unknown. But you gotta embrace that!

But after this agonising over what will be, I came to the following conclusion: the world has a funny way of surprising us and showing us we were wrong in ways we least expect. Instead of me wasting my precious time and energy wondering what’s going on and what will go on, I’m going to make sure that I focus on what I can control: my emotions, my time horizon and how often I invest. Oh, and of course I can control what I buy (and don’t!). All the rest, though, is loud, loud (unwanted) noise. The sort of noise your neighbours make when you’re trying to sleep and all you wanna do is yell ‘BE QUIET!!!’ (But it’s 24C at night and closing the window is not an option).

I had the chance to meet with a UK fund manager, a vibrant personality whom I learned much from that one conversation with him. During our convo (more like a firing squad of me and my questions) he told me that his team do not worry about inflation, interest rates and all the rest of that macro jazz. They focus on finding companies that have the ability to multiply their earnings by 5x or 10x over a 5-year horizon. Because its earnings drive share price performance, not the other way round! He said I shouldn’t worry (not even for a minute) about the overall state of the economy because that I cannot change. Instead, I can be a long-term investor and through time, patience and consistency achieve my financial goals.

So, now that we’ve figured out it’s totally useless agonising over the un-controllables and how it’ll only increase stress, anxiety and decision paralysis, let’s focus on what we can control. While having peace of mind with your investments is pretty tough during bear markets, controlling what you can is the surest way. Feeling like you’re in control in times like these is hugely underrated. (Read here how you can make sure your portfolio survives – and thrives! – during a bear market)

You and your portfolio will be better off if you divert your attention to the things you can control: your emotions, your time horizon and your consistency. Everything else is noise. A pure distraction. Understand that and you’ll be in a very different position. 

So here are 3 very controllable things. Get them underway and you’ll feel like you’re in the driving seat once again.

#1 Control your emotions; not the other way round! 

Investing and emotions have more in common than you think. We’re so used to thinking that investing is all numbers and whatnot but it’s actually a lot more than that. Our emotions play a gigantic part in our returns; after all, they determine whether we’ll panic-sell, buy on greed, stick to safe stuff or whether we’ll invest at all! 

During times of peak uncertainty and un-controllable-ness (that’s totally a made up word) we must do all we can to keep our emotions at bay. And the first step in doing so is to realise we have them in the investment space to begin with! 

One emotion that seems to rule over the others is fear. It’s fear that prevents us from investing in the first place. It’s fear that causes us to shy away from risky areas (like stocks) and it’s fear that fools us into panic-selling when things get too much. 

To be a great investor and to make it to the other side, you’ve gotta know yourself. This isn’t the time to pretend you’re someone you’re not. Don’t kid yourself. Dig deep and find out what fears are holding you back. (Read here about these 3 real fears that could be holding you back from investing). It could be you’re afraid of losing money or it could be you’re a sore loser and can’t think of anything worse than losing your money. Whatever it is, identify it and you’ll be one step closer to sorting it out! 

You’ve gotta have nerves of steel when it comes to bear markets. You’ve gotta be able to think (and act) rationally, clearly and calmly. Anytime you find yourself acting in haste, you’ve gotta take a step back because that’s usually when mistakes get made. When we act short-term. 

Patience and consistency is how you’ll win. 

So keep calm and carry on. You have more control than you think. 

#2 How long you plan to be invested for

This one is very much in your control! How long you’re invested for is up to you. And if there’s one thing I’ve seen is that the longer you’re invested for, the longer you have for your losses to turn into wins and for those wins to compound. Time is magic. Let time do the heavy lifting.

No matter what’s going on right now, and there is A LOT, this too shall pass. And in a few years, markets (and us) will have other stuff going on. The ability to look ahead when all looks bleak is a wonderful thing. In the long-run, returns compound and growth starts to happen exponentially. But when we’re in the thick of it, stuck in the short-term, that’s when we can’t see/think clearly. We think all the bad stuff that’s happening now will stick around forever. 

This too shall pass. Zoom out to see the bigger and learn to appreciate the beauty of time. Time really is the air markets breathe. So keep it coming. 

The longer you remain invested for, the greater the chance of success. And that is something that is in your control. So dear reader, don’t quit too soon. Remember what you came here for. 

Think in decades not days.

#3 How often you invest 

Boy can you control this one. 

We’re not at a casino. However much it might feel like one, the stock market is not a place where you run to every night (and every day) to pile in more than you can afford. It’s a wealth-building machine not a penny-slot one. And this compounding machine works best when you put money in consistently and when you leave it to do its thing. Not trying to time anything. 

Give yourself some control by automating your investments, ensuring that you’re investing consistently, over a long, long time. No matter what headlines are saying. That way you get to take advantage of dollar-cost averaging which basically means you buy the average of the market rather than trying to time the highs/lows ‘cause as we know, that’ll only land us into trouble because markets are un-timeable (made-up word).

Don’t try to invest with a lump-sum. Drip-feed your money into markets. That’s how to stay in the game. If not, you run the risk of losing control of your portfolio and you might find yourself investing on sentiment rather than sense. 

Emotions, time and consistency. That’s the stuff you can control. 

Forget about the rest. Seriously. 

You do your thing, let markets do theirs. 

Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.