FEATURE — After an out-of-town Saturday night football game, my sons and I flew home well after dark. The night air was crisp and clear, and the city lights were especially beautiful.
As we headed out over a largely uninhabited region of Utah’s Wasatch mountains, the landscape below turned to darkness on the moonless night. I listened attentively to Air Traffic Control while monitoring the aircraft’s systems. In the dark of the night, I thought I detected a slight sputter in my plane’s engine.
There is a saying among pilots that airplane engines never run as well at night. Even small private airplanes have many redundant systems but there is usually only one engine and losing it at night over mountainous terrain would be challenging for even the best pilot. That awareness leads your mind to play tricks on you.
You hear strange sounds and feel vibrations that cause you to constantly question the airworthiness of that plane that only a few sunny hours earlier was purring like a kitten. Reality and perception are two very different things, and the perception of your safety in an airplane can change dramatically when you are surrounded by darkness.
During times of economic difficulty, or suddenly falling markets, investors find themselves much like a pilot over mountains at night. Their stress level increases, and they begin to worry about things that didn’t bother them before. As their fear increases, they begin to question every decision and panic easily. With increased sensitivity, every bit of news causes them greater concern. Some simply bail out altogether, feeling the risk of investing during an economic night is just too great.
The irony is, given the U.S. stock market’s perfect record of recovering since its inception, it can be said that the lower the market falls, the less risk an investor actually has. Or in other words, as the market (and your portfolio) goes down, your risk decreases, and your likelihood of recovery improves. In reality, if your investments are 20% cheaper than they were a few months ago, the best investment opportunities out there may be the ones you already own. But reality and perception are often at odds with each other, especially on a dark night.
We humans like to think we are rational beings, but all too often we let our emotions drive our decisions. As I flew over the sparkling lights of Cedar City, with both sons quietly sleeping in their seats, I marveled at the beauty and serenity of the world below. It was a magical experience, only a pilot in the front seat can appreciate. I thought of a report I had recently read from the FAA wherein they surprisingly listed night flying as the safest time to fly. Even single-engine airplanes had significantly fewer accidents at night, as measured per hours flown than during the day.
They couldn’t quite explain why it is safer, but it is assumed that pilots who fly at night pay more attention to detail, thus creating a safer environment. Looking down at Interstate 15, I was also reminded that my flight was safer than had I been driving my car on that dark and icy winter highway.
Despite investors’ heightened fears during turbulent markets, history shows that the most profitable time to invest is when markets are down. Those who bought during economically sunny 2006 spent many years recovering from the crash of ’07. Likewise, those who invested during that crash, and held on, certainly did not regret the strong recovery that followed.
As we approach the election of 2024, interest rates remain high, inflation is being stubborn, and political uncertainty are all contributing to a growing concern in the investing markets. Add in the several wars waging, or brewing around the world, and it may seem like it’s starting to get a little dark out there for investors.
If you are concerned, I would suggest a review of the long-term statistics of the markets, and the consideration that the coming year may actually be a good time for investors to consider a little night flying. Whether in investing or in an airplane, it can be the most beautiful time to travel.
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