What My 2-year-old Taught Me About the Financial Markets

Last night we had a really loud thunderstorm, with very bright flashes of lightening. Now my son Ian, who is two and a half, had never heard such a storm and it scared him. Betsy & I spent well over an hour calming him down.

Finally, I pulled up the live radar weather map and showed him where we were, and where the storm was. "Soon," I said, "the thunder will be over, and we'll just have rain." Sure enough, in a couple of minutes the thunder and lightening ceased and the storm became a gentle, soothing rain.

When Ian heard it, he turned to me with eyes wide and said in a hushed voice, "Daddy, STORMS GO AWAY!"

Now, I was a partner in a money management firm and spent nearly 25 years in the financial markets, and I've been through a few storms! But I've never heard it put better than Ian said it last night.

"Storms go away." In the financial markets, as in the weather, things change in cycles. Things go up, and then they go down. And then they go up again. And when they're going up, it looks like they'll go up forever. And when they go down, it looks like they'll never come back. But things go up and they go down, and they go up again. If we're smart, we'll step back, get some perspective and be ready when things come back.