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IN FALL 2021, I WROTE about my father-in-law’s impending death due to cancer. He died a few months after publication. I had the honor of writing his obituary. Like my wife and her family, I have found myself wanting to call him many times since he died.
I was born in the early 1980s. That means that, until very recently, all I’ve known is a falling interest rate environment. People from my father-in-law’s generation knew environments like today—when interest rates and inflation rose together, and stocks didn’t necessarily perform well.
When I think of the 1970s, I think of bell-bottom jeans and Jimmy Carter wearing a sweater. But those who lived through that turbulent time likely recall the decade’s infamous stagflation, high unemployment, oil embargo, high interest rates and soaring commodity costs. I don’t have any experience investing in such times.
Last year, a hypothetical 60% stock-40% bond portfolio had its worst performance in decades. It goes without saying that this past year has made me wish I had my father-in-law’s advice. How do you invest in times like these? Is now the time to shift more into bonds to take advantage of higher yields? If so, should I buy conventional fixed-interest bonds or Treasury Inflation-Protected Securities?
Obviously, I’ll never know exactly what my father-in-law would say. But thanks to the many hours and days we had together over the years, I think I can hear his voice in my head.
“Stay the course,” he might say.
“Remember your long investing horizon.”
“You’re not like me, you’re still young.”
“Don’t invest in anything if you don’t have a long time to see it through—like at least 10 years.”
“Don’t worry so much.”
“Hey, at least it’s not like the ’70s.”
You know, he’s right. Today’s unemployment rate is low. My wife and I still have great jobs. Thanks to all our hard work and the investing we’ve already done, we’re well positioned for the future and to take advantage of today’s low stock prices.
It’s at times like these that I’m thankful for all the down time my father-in-law and I spent on long weekends and holidays, shooting the breeze about our favorite pastime: personal finance. Yes, I’d love to pick his brain during this unique—to me and my generation—time in the markets.
Still, I’m grateful to have had his wisdom downloaded for times like this, as well as for the many challenging and different times that no doubt lie ahead. Maybe someday, many years from now, I will spin yarns about my “old war stories” of 2022 to a protégé of my own. Dad, I hope I’m doing it right and that you’re winking down at me, as I try to stay the course through this strange time.
Ben, thank you for this. My dad died in 2003 and a few mornings a year I still wake up with something on my mind and think, “I’ll talk to Pop about this.” A few seconds later I remember I can’t, but sometimes I can guess what he’d advise.
“What has been will be again, what has been done will be done again; there is nothing new under the sun.” Ecclesiastes 1:9 (NIV). Written 450-180 BCE
Thank you Ben for the great memories. This made me think of the many
discussions with my own father who passed in 2014. The older I got. the wiser he became as I understood more of his meanings. It is hard to beat
experience.
So true.
Sounds like a very fine man. The last line brought brought tears to my eyes. Thank you for this.
Me too. Thanks.
Great thoughts and learned wisdom.
Just before I read this I was thinking about mortgage rates and the past. What are folks today complaining about- move along, nothing here to see.
I bought a house in 1971 – 7-3/4% interest, in 1980 next 9-1/2% and the last in 1987 9-3/4% interest.
I recall the GIC in our 401k paying 16% interest in the 1980s.
I have my old WIN button in my treasure drawer.
Your father in law was a wise man.
Not so strange a time in the 21st century is it?
This reminds me of another thing he would say, “don’t bet against the United States.” I haven’t and I don’t intend to, but I sure hope that holds.
Ben, thanks for your article illustrating the value of number seven of Jonathan’s “Ten Words.” It’s a good reminder that casual talk while “shooting the breeze” often sinks in and stays put. Sound money principles are surely part of the legacy we want to leave our children.
Thank you.