Monday was the first day of school for my boys, Bradley and Mason, as they ventured off to 3rd grade and 1st grade respectively. Unlike most mornings where I head off to the gym before anyone is awake in my house, I was home to greet my boys and tag along with Kelly to take them to school. But before we left, I was working on my laptop and had CNBC on the TV. First, Mason walks over to me and says, “oh, that’s a lot of red, that means it’s a bad day.” Bradley then walks over to me and says, “I thought it was always green?” I laughed and wished that was the case. I took a minute to ask them a couple of questions while they were placing their water bottles in their backpacks.
I looked at what Bradley was wearing and asked him who made his clothes, he first said Michael Jordan, but then I asked what that swoosh symbol was, and he said Nike. We pulled up Nike stock and it was red or “bad” and I asked him if the stock was red did that mean he wouldn’t want Nike any longer. He said no and that Jordan wears Nike and so does Lebron James, Devin Booker and George Kittle, plus many of his friends. So, I asked him if there was an opportunity to buy Nike clothes or shoes on sale would he want to do it and he said, “yes” and I told him that is where the opportunity lies in a red market day – buying companies on sale.
I then turned my attention to Mason and asked him if he was excited to wear his new backpack. He said, “yes” with a big smile. I then asked him who made his backpack, he said, “Minecraft.” Which in his mind is correct, but the reality is that it came from Pottery Barn. I asked him to open the bag and find the tag just to prove my point. I went on to ask him, that even though he likes his new backpack, would he want that same backpack every year, he said “no” he told me he might want a different backpack next year as he will be older and might want one like Bradley has (49ers edition). We proceeded to pull up Williams Sonoma (WSM) stock, the company that owns Pottery Barn, and it, too, was red. I told him that he, like many other kids, will probably want or need new backpacks every year or so and that Pottery Barn and similar companies will need to continue to sell bags, and school supplies every single August for many years ahead. We looked at the WSM stock chart over the past five years and learned that it has increased in value by 300%. He smiled at me and said that they must make a lot of backpacks.
Days like yesterday and weeks or months where we experience volatility can be painful and tough to stomach. Finding opportunity in market disruption takes time and patience but can lead to wealth creation. Additionally, market volatility can lead to re-prioritizing risk and taking a deeper dive on the type of risk you’re willing to take as well as the investment portfolio you maintain. This is why we have invested heavily in our risk management software and prioritized and advocated for our advisory investment solutions.
As always, please feel free to reach out with questions or to have a chat.
