Think Of Your Decline In Net Worth As A Loan

The idea for this post popped in my head, like most do, on a long bike ride.  The markets had just seen a few days of massive declines.  To me it’s nothing worth noting.   I’ve been there, and done that.  But I realize many folks out there are new in their investing journey and they’re seeing some serious volatility for the first time.  They may not have much buffer to play with, it can be nerve wracking.  I was there in 2000 myself during the tech crash.  So I thought I’d convey a slightly unconventional way to think about market declines.  One that – to me at least – helps take out some of the sting and worry.

I’d like to introduce you to Mr. Mark E’tdecline. 

It’s a French surname, don’t worry about how to pronounce it, it’s tricky. Mr. E’tdecline is mostly a recluse and a hermit.  He spends most of his time alone and rarely goes out in public. 

Actually he’s been seemingly under a bridge for the majority of the last 8 years! 

But here’s the thing, every once in a while, Mr. E’tdecline comes out of his shell and appears in public.  He even makes TV appearances and does interviews for major websites like Bloomberg and CNBC. 

When he does come out in public everyone talks about him!  He becomes an instant celebrity, often becoming the top story in the news.  Many talk about him negatively.

We’re not sure why he has the sudden and drastic changes in behavior, but he just does. 

And nobody, we mean nobody, is able to predict when he’ll come out of his shell, or when he’ll go back to being a hermit. 

Here’s where the problems begin…..  When he comes out of his shell, your net worth goes down. 

It just does. 

What happened to your money? 

Well, you’re giving a loan to Mr. E’tdecline.  If you have money invested in stocks you have no choice in the matter. 

When Mr. E’tdecline rears his ugly head (he’s really ugly by the way….) then you give him a loan. 

We don’t know how much the loan is for either.  It varies every time. 

Sometimes it’s like 30% of your net worth! 

Once, starting in 1929, Mr. E’tdecline started dancing around in public and things got crazy.  He stayed out for a few years, and if you had money in stocks you had to give him a loan of 89% of your stock investments between 1929 and 1932. 

People were not happy, they were depressed actually.  Those were dark times.

But here’s the good part.  Even though you’re probably going to be upset about giving him a loan at the time and amount of his choosing, just hold strong and do nothing.  Trust me. 

The best thing to do is to not sell your loan! 

You do have the option of selling your loan which will give you back some of your money, depending on how long he’s been out in public on one of his PR tours of course. 

Believe me, when you see him take 10 or 20% of your net worth it’s easy for panic to set in!  You’ll say to yourself “I can sell the loan now and at least get something back before this goes too far!  Make the bleeding stop, this damn E’tdecline guy sucks!” 

But wait, here’s the best news of all – Mr. E’tdecline is actually a super stand-up dude. 

He always pays you back, and with interest! 

The only problem is he doesn’t tell you when he’ll give you your money back.  Or how much interest he’ll give you. 

And once he starts giving your money back he won’t tell you how long it’ll take to give you back all of it. 

But make no mistake, he has never failed to pay back every loan, and with really high levels of interest too! 

His track record is amazing and goes back almost 200 years!  So he keeps his promises, every time. 

But he’s really not big into transparency.  Everyone has flaws though right?