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Is Facebook’s Record Loss a Wake-Up Call?

February 4, 2022 By E.J. Smith - Your Survival Guy

President Obama, Facebook CEO Mark Zuckerberg and entrepreneur Mariana Costa Checa sit on a panel at the Global Entrepreneurship Summit, held on June 22-24, 2016 at Stanford University in Palo Alto, California. [GES Photo/Public Domain]

You can just hear the phone conversations and texts going on today with worried investors in Facebook calling their brokers. “Hey, how are we doing?” Which is the exact moment the caller realizes the “we” doesn’t include his broker because he’s off on a long weekend in Florida. Don’t ever mix up “we” with “me” when it comes to your money because you learn the truth—after the losses.

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Your Survival Guy does not stay awake at night worrying about what the market’s going to do for me. I do not worry about “annual” returns or “comparisons” to benchmarks. These are metrics for those worried about “keeping up with the Joneses.” The more difficult path in this business is to be Your Survival Guy, and follow the Prudent Man Rule and ignore the noise of the markets.

In the September 2015 issue of Richard C. Young’s Intelligence Report, Dick Young wrote:

The Prudent Man Rule is based on common law stemming from the 1830 Massachusetts court formulation Harvard College v. Amory. The Prudent Man Rule directs trustees “to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital invested.”

Since I started our family investment management firm in 1989, I have operated under the assumption that the Prudent Man Rule to this day carries as much weight as it did in 1830. Common sense and prudence just don’t go out of style—ever.

Have a mix in bonds and stocks at 70-30, or 30-70, as advised by Ben Graham and Richard C. Young. Study the display below. (Notice that 2018 was the last down year for stocks. This is up to date.)

Here’s Your Survival Guy’s takeaway: Today, the key is to invest directly in bonds and stocks, so you own your positions outright and not in a mutual fund or ETF. Why? Because when you invest with a group of other investors, they may panic and sell, forcing the fund to liquidate positions like Facebook.

Action Line: Money can bring you happiness ONLY if you can keep it. Investing is hard. Investors tend to learn the hard way. Your Survival Guy is here for a reason.

Originally posted on Your Survival Guy.

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  • Author
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E.J. Smith - Your Survival Guy
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998.

E.J. has trained at Sig Sauer Academy in Epping, NH, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention.

E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@yoursurvivalguy.com

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