The Only Thing We Have to Fear is Fear Itself

June 12, 2019 12:34:08 PM

As ones that follow the business news on a daily basis, we continue to be absolutely baffled and just plain amused by some of the things we see and hear regarding the next big correction or crash, as well as the things that are said to generate a “fear factor” in investors. When will it happen? Why will it happen? How much will the market go down? Who really knows – who even cares?!

After all, if you have appropriately diversified your portfolio and have the appropriate allocation of stocks, bonds and cash, even if you’re retired, you should be in a strong position to ride out a short-term pullback in the economy or “stock market” – and yes, three years or less is short-term!

We think many investors spend more time focusing on volatility, or the next correction or crash that may come, rather than trying to understand what businesses they own in their portfolio and why they own them in the first place.

Why? Besides the fact they do not have any CLARITY in their portfolio, they are subjected to an “asset allocation” strategy that is opaque at best, and does not provide the flexibility and transparency that allows an investor to “stick to the knitting” when it comes to successful investing in businesses over time.

Do business owners run their businesses without knowing what they own or why they own them? Of course not! Now, we realize many investors don’t have the time, or don’t want to know all of the details about their portfolio. They just expect the portfolio to do well because that’s what they pay their financial advisor to do. Although we can appreciate an investor’s position on not wanting to have the details, it is then incumbent upon them to fully understand the Investment Philosophy and Strategy of their portfolio. We know… we know… fear sells and it really is unfortunate. I mean, can’t we find more pleasant things to think about when it comes to getting investors engaged in investing ideas?

Nope… because fear sells.

It continues to amaze us that even now, after more than ten years have passed since the stock market bottomed at the end of the Financial Crisis, investors are still fearful and concerned for the next big crash while the U.S. markets and many well-run compa­nies’ values continue to move to all-time highs!

Frankly, who cares when is the next correction or crash? I mean, isn’t it true that EVERY time we have had a correction, crash or financial crisis, the stock market, and more importantly, great BUSINESSES, have continued to grow?

It is really unfortunate that so many investors are being continually bombarded with negativity and scare tactics about investing in the “stock market” and focusing on all of the negativity around the world! Truth is, the same bad things have been happening around the world for a long time. Nothing has changed!

Bottom line: Just like FDR rallied the country over 95 years ago in the midst of the Great Depression and profoundly stated, “The only thing we have to fear is fear itself,” investors should take heed as they focus on the things that really matter.

Focusing on opportunities that present themselves during market sell-offs while others are fretting is staring fear right smack in its face. How does one accomplish this? Invest like a business owner? Why? Because if you own equities, you are a part owner of a business! It will allow you to take advantage of opportunities just like a business owner would by taking advan­tage of volatility by having great flexibility and transparency in your portfolio.

Appropriately allocate stocks, bonds and cash based on your financial needs. How do we know that we are not even close to the end of this secular bull market? The answer to this question is because we are not even close to euphoria in the markets. Therefore, “The only thing we have to fear is fear itself” preaches the need to invest with Clarity!

Chuck Etzweiler

Chuck Etzweiler

MBA, CIMA®, CFP®, CMT, Chief Research Officer & Senior Vice President

With more than three decades of investment industry experience, Chuck directs the on-going research efforts of the firm, much of which help both advisors and clients understand the philosophy and strategy of Nepsis, Inc. in a deeper manner. A high percentage of the focus of the research is centered around money manager pitfalls, investor short-comings and repetitive behavioral biases that detract clients from earning optimal returns.

Prior to joining Nepsis, Chuck worked as Chief Market Strategist for True North Global Research and as an Investment Analyst with both Wells Fargo and the Bank of Hawaii. Additionally, Chuck has earned the CIMA® designation and is a Chartered Market Technician. Chuck is a graduate of Syracuse University and also has earned his MBA in Finance from the Crummer School of Management in Winter Park, FL.

Chuck is an active member of the Market Technician’s Association and the Investments & Wealth Institute.

Chuck was raised in Allentown, PA and now lives in San Diego, California with his wife and two adult sons.



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