The Big Question #31: How Can You Be So Sure?

Hello everybody and welcome to this month's edition of the big question. This month we cover one of the most frequently asked questions during bouts of extreme market volatility. I believe that this is often because in these moments we appear and truly are about as confident and optimistic as anyone you'll encounter. This confidence and optimism leads to our big question. How can you be so sure? How can you be so sure that the market will bounce back or that my portfolio isn't going to zero? How can you be so sure that this isn't the end?

And let me be clear, first and foremost, this confidence isn't because we have the answers to the test. We don't know better than anyone else when we will get to the other side of any market downturn. We also don't know how deep it will go or how the market or even the world will look afterwards. What we do know is who we are, who we've been, and the tools that we have in our repertoire to lean on in these moments. To us, it all comes down to a few key things. And for anyone who's been a client of ours through a few of these market downturns, you probably know exactly what I'm referring to. In fact, I'm sure a few of you could probably even film the remainder of this video. But to us, there are really three keys.

First is preparation. We know that market downturns anywhere from 5 to 50% are going to occur. We're never naive enough to think that the market is going to go up forever. Nor do we believe that it will continue down forever. For that reason, we work to continuously stay well positioned, rebalancing each time we have the opportunity by selling a portion of our outperformers and buying more shares of our underperformers, knowing that over time, each of these tends to work back to their historical averages. And we want to make sure that we are consistently working to stay on the right side of that trend.

Secondly, we aren't doing anything that we shouldn't be doing. As Warren Buffett says, it's only when the tide goes out do you discover who's been swimming naked. And here at Presilium, we believe in modesty. We invested in liquid investment vehicles that hold hundreds of stocks. There are no trendy triple leveraged hedged whatevers and private this and thats. There's nothing that we feel could unnecessarily expose our clients if the market changed on a dime. Ultimately, we know and have a trust and a belief in how companies will behave, act, and react in these moments. And we believe that they will work endlessly to do whatever it takes to get their company to the other side of that moment. The best and the brightest minds in the world working to solve the problem. We can get behind that.

And lastly, we don't view ourselves as investors in the stock market. We view ourselves as long-term investors in the best companies in the world. Said another way, we are long-term investors in humankind, in our ability to adapt, to innovate, to adjust. I mean, with that in your back pocket, how could you not be excited where we're going to be 5, 10, 50 years from now? We're making incredible strides in technology, in healthcare, in the world. Are we there yet? Is everything perfect? No. But if you truly step back and think about where we are from where we've come, you have to love the trajectory that we're on and what it likely means for our kids and future generations.

Thanks for joining me, everyone. Until next month.