Why I’m Not Losing Sleep Over the Stock Market Decline: Learning from the Masters by Tom Monson
If you’ve been watching the news lately, you might think the stock market decline is a sign of impending doom. Headlines scream about recessions, falling indices, and panicked investors. But me? I’m not worried. In fact, I’m sleeping just fine. Why? Because I’ve spent time studying the greatest minds in investing—those who’ve navigated downturns, crashes, and recoveries with wisdom and grace. And they’ve taught me some invaluable lessons that I’m holding onto during these turbulent times.
Let me share why I’m calm while others are pulling their hair out—and how you, too, can find peace in the wisdom of legendary investors.
Stock Market Decline: The Market Always Recovers
Warren Buffett, the man who’s seen more market ups and downs than most, famously said, “The stock market is designed to transfer money from the active to the patient.” In other words, those who panic and sell during downturns often miss out on the recoveries that follow. History backs him up. From the Great Depression to the financial crisis of 2008, every major stock market decline has eventually given way to new highs.
Stock market declines aren’t anomalies; they’re part of the natural ebb and flow. It’s like the tide going out—yes, it’s unsettling, but you know it’ll come back in. And if you’re patient, you’ll be there when it does. That’s why I’m not sweating the red numbers on the screen. I know that today’s decline is tomorrow’s opportunity.
Quality Companies Thrive in the Long Run
One of the greatest lessons I’ve learned from Benjamin Graham, the father of value investing, is to focus on the fundamentals. Graham taught us that a stock isn’t just a ticker symbol—it’s part ownership of a business. If the business is solid, with strong earnings, low debt, and a competitive edge, it will survive the storm and likely come out stronger.
Warren Buffett took this idea further, emphasizing the importance of investing in companies with an “economic moat”—a competitive advantage that protects them from rivals. Think of Coca-Cola, Apple, or Johnson & Johnson—brands that have weathered decades of change and still dominate their industries.
When I look at my portfolio, I don’t see a collection of stocks. I see ownership in quality businesses. Sure, their prices may fluctuate in the short term, but their long-term value remains intact. That’s why I’m holding on—and even considering adding to my positions during this downturn.
Patience Is a Superpower
Peter Lynch, who delivered an incredible 29% average annual return during his time at Fidelity’s Magellan Fund, once said: “Everyone has the brainpower to make money in stocks. Not everyone has the stomach.” His point? Successful investing isn’t about intelligence—it’s about temperament.
Lynch’s idea of “tenbaggers”—stocks that grow tenfold over time—requires patience. These kinds of investments don’t mature overnight; they take years, sometimes decades, to reach their full potential. But the rewards for waiting are worth it. The stock market decline we’re experiencing now is just a blip in the timeline of a great company’s growth. I’m holding onto that perspective, and it’s keeping me calm.
Stock Market Decline? Control What You Can
Jack Bogle, the founder of Vanguard and the father of index funds, believed in focusing on what you can control: costs, diversification, and discipline. You can’t predict the market’s next move, but you can minimize fees, spread your risk, and stick to your strategy.
When the market is volatile, it’s tempting to tinker with your portfolio. But history shows that trying to time the market is a fool’s errand. Instead, I’m following Bogle’s advice: staying the course, keeping my costs low, and letting time do the heavy lifting. The beauty of this approach is its simplicity—and its effectiveness.
Crisis Equals Opportunity
John Templeton, another investing legend, famously said, “The time of maximum pessimism is the best time to buy.” He made his fortune by investing when others were too fearful to act. During World War II, he bought stocks in every company trading under $1—and many of them went on to deliver extraordinary returns.
Right now, the decline in the stock market is creating opportunities. Quality companies are trading at discounts, and for long-term investors, this is an ideal time to buy. I’m not rushing in blindly, but I’m keeping an eye out for bargains—because I know that today’s fear is tomorrow’s gain.
Compounding: The Eighth Wonder of the World
Albert Einstein reportedly called compound interest the “eighth wonder of the world.” And he wasn’t wrong. Compounding is the engine that powers long-term investing. The longer you stay invested, the more your returns compound, creating exponential growth over time.
But here’s the catch: compounding only works if you stay invested. Selling during a downturn interrupts the process and locks in losses. That’s why I’m not selling. I’m letting compounding do its magic, even if the short-term results look ugly.
Stock Market Decline? Why I’m Not Worried—and Why You Shouldn’t Be Either
The lessons I’ve learned from Buffett, Graham, Lynch, Bogle, Templeton, and others have given me the confidence to weather this storm. I know the market will recover—because it always has. I know quality companies will thrive because they always do. And I know that patience, discipline, and a long-term perspective are the keys to success because the greatest investors in history have proven it.
If you’re feeling anxious about the stock market decline, I encourage you to take a step back. Ask yourself: Are you investing in quality businesses? Are you focused on the long term? Are you staying disciplined? If the answer is yes, then you’re on the right track.
And if you’re looking for more wisdom to guide you through these turbulent times, I highly recommend reading Legendary Investors and Stock Pickers. It’s a treasure trove of insights and strategies from the greatest minds in finance. Whether you’re new to investing or a seasoned pro, this book will help you navigate the challenges of the market with confidence and clarity.
Remember, the stock market isn’t about avoiding every downturn—it’s about staying the course and trusting in the process. As Buffett would say, “Someone is sitting in the shade today because someone planted a tree a long time ago.” So, plant your tree, water it with patience, and let time do the rest.
You may also be interested in A Look Into the Future an article about Cathie Wood.
You may also be interested in Let Your Winners Run, my new book about how to maximize your profits from investing in stocks.