What Years Of River Guiding Taught Me About Successful Investing…
We were deep in the wilderness. Our camp was nestled among the towering ponderosa pines alongside the energetic riverbank.
Guests sat around the campfire mesmerized by the flames while kids drew squiggles in the dirt with sticks nearby. I was in the makeshift kitchen, layering my famous lasagna into the Dutch oven, getting ready to smother the Dutch oven in coals to bake it.
It was a perfect start to the evening. But the tranquility floating around camp immediately shattered…
Two guests came sprinting down the trail. They were concerned that a small group we dropped off upriver to hike to our camp was lost. I sent two of my guides to go look for them.
One of the guides came running back after finding the unsettled group. They thought they had taken a wrong turn. The consensus was to turn back to see if they missed a fork in the trail. But as they worked their way back, nothing was looking familiar. They knew they should have been to camp by now, and the sun was setting behind the mountain.
The bickering amongst the group intensified. Some wanted to go one way, while others thought the other direction was correct. Anxiety increased. They were a long way from nowhere. Somewhere along the trail, one of the hikers tripped over a tree root and severely injured her knee. She couldn’t make it two more steps.
My two guides found the lost hikers.
One returned to get an inflatable kayak to take back upriver. From there, he would float the injured hiker down safely. The other guide led the group back to camp. Meanwhile, I’m holding camp down, trying to calm everyone’s nerves while keeping dinner from burning.
As the hiking group made it back to camp, chaos ensued. The guests huddled together to hear the story, and about their injured comrade who had yet to arrive. Some of the guests were very upset at us for making them believe the hiking trail was easier than it was.
Dinner was ready just in time. I steered the guests toward the kitchen, knowing that a warm plate of lasagna should help alleviate some of the anxiety.
The injured guest finally arrived. We assessed the injury, got her comfortable, and started pain medication to reduce inflammation. Just as everyone was settling down, we had an even bigger problem…
A few bites into dinner, one of the guests frantically asks if the lasagna was made with any nut ingredients. He was deathly allergic to nuts.
None, I reply.
He said he could feel his throat beginning to swell, cutting off his airway. Anaphylaxis.
Things had just gone from bad to worse. The nearest hospital was a four-day float out, and air support (assuming we could get the satellite phone to work) was hours away.
I sprinted to our big first-aid kit and grabbed Benadryl and an epinephrine pen. In all my years guiding in the backcountry, I’ve been lucky enough to always avoid severe injury and death. I wasn’t about to let that happen now.
Fortunately, the guest had dealt with this nut allergy all his life. He was aware of what was going on and what needed to be done. He, of course, carried his own epinephrine. But anaphylaxis is serious, even for the most seasoned person dealing with allergies.
What started out as an evening of solitude quickly evolved into pandemonium.
In the end, everybody was okay. Everybody survived. And everybody had a fantastic six-day vacation rafting down 100 miles of whitewater through 2.4 million acres of wilderness.
Mayhem In The Investing World
You might be wondering what this has to do with the stock market. This situation — where the hits seemingly kept coming — is very reminiscent of our current state of affairs…
Coming out of the depths of the pandemic, everybody was making money in the stock market.
It was beautiful. But just like that night on the river — where things went from the “perfect” evening to complete chaos — the same thing happened in the investing world.
Investments have gone from bad to worse.
It started with tech stocks. Last year, they were the first to bleed.
Then this year, the S&P 500 fell into a bear market. The Dow Jones Industrial followed suit. And, of course, the tech-heavy Nasdaq has been hit the hardest, down nearly 30% on the year.
That’s not to mention soaring inflation, raising interest rates, the Fed’s quantitative tightening, retail’s bloated inventory problem, the war in Ukraine, an energy crisis in Europe, and mass layoffs in the tech world. And, of course, I would be remiss if I didn’t mention the latest blow-up in the crypto space.
The point is, things compounded quickly. But this is why I constantly preach the value of holding dominant firms that produce ample cash flow in the core of your portfolio.
For example, over at Capital Wealth Letter, we had shares of Alphabet (Nasdaq: GOOGL) take a 10% haircut after third-quarter results. The stock is down 33% overall so far this year.
Without going into excruciating detail, I think I can safely say that this dominant firm will be okay. The question, of course, is when. I get that. But owning a stock like this should help you sleep better at night — not to mention produce outstanding returns over the long run.
The bottom line is there’s a lot going on in the market right now. There will be plenty of time to wrap our heads around everything. And while I can’t say for certain whether this recent bullish action will signal the end of the bear market, I will just leave you with this…
That one hectic evening on the river didn’t ruin the trip. We got through it. The same will happen with investing. Yes, it’s been tough. Some of your holdings may be down big. But if you own the kind of stocks we regularly talk about (dominant firms, generate high cash flow, reward investors with dividends/buybacks), it will all be okay.
In the meantime, a furious competition is taking place to see who will take the top spot in the private space race. And investors have an opportunity to cash in…
My latest report tells readers all about Elon Musk’s secretive project and what it could mean for the future of this burgeoning industry. And even though it is “off limits” to regular investors, we’ve uncovered a “silent partner” that’s tradeable right now and gets you in on the ground floor…