The recent dips in the stock market in Fall of 2020 have many people who remember what happened in 2009 wondering if a new investment bubble is about to pop. That last round resulted in a major recession that took almost four years to recover from, and it almost shattered the modern credit system with how much debt suddenly became illiquid and useless in terms of future income for many institutions. Yet, since then, Nils Larsen like many portfolio managers has seen the same stock market rise back up, continue to keep rising, and reach historic heights in January 2020.
Part of what’s going on now, from what Nils Larsen can easily reflect on with two decades of investing experience, is the fact that the current market is extremely heavy with investment volume as well as extremely volatile. For example, while the record-breaking ceiling was reached in January 2020, the same market dropped almost 8,000 points in mid-March 2020 during the COVID-19 panic. Then it turned again almost to the same heights. That kind of rollercoaster ride never existed until the Fall of 2007 when the 2000s Recession started to creep in. So, of course, that has a lot of folks asking whether anything of practice, principle, or logic from the last few decades even applies to today’s investing horizon. Are folks really on top of another bubble or just a continuing rise?
Nils Larsen has dealt with all kinds of risk types, from newbie 20 somethings who can tolerate as much risk as taking a rocket to the moon, to folks on the edge of retirement who don’t want to see what happened to their friends in 2009 happen to them so close to retiring. And the current precipice of the market in 2020 clearly has all the hallmarks of a classic bubble waiting to pop and come crashing down again.
One might think that Nils Larsen is a bit out of touch now with the latest financial market behavior, being situated in his Southern California offices versus major market towns like Chicago or New York City. However, geography doesn’t matter than much in age if digital investing. Nils Larsen with computers has just as much access to the same market projection tools as the brokerages on Wall Street, any maybe a bit better objectivity by not being surrounded by the physical angst of big city investment houses.
As Nils Larsen looks at the current market, ironically, the same principles of the good investment may still apply. Plan carefully, invest to hold and grow, protect value, and refrain from being greedy. Those with a solid diversification approach in their portfolio, according to Nils Larsen, can weather a pending drop if it occurs, and the market has repeatedly rewarded investors who hold on in the face of panic versus running for the door. In fact, many of Nils Larsen’s early wins were investment positions at the trough of 2009 as they rocketed back up tremendously by 2013.
Tomorrow is always going to be full of surprises, but for Nils Larsen, it’s very much the potential to succeed as well. So it’s better to try moving forward than to worry and freeze today.