In Falling Markets, Keep Heart ...

It was a wild week for bank stocks. Several of my positions, including U.S. Bancorp and Wells Fargo & Company skyrocketed from around $20 per share to $30 per share, recouping nearly 40% in a matter of hours. This is why empirical study after study has proven that if you try to time the market and are out of it on only a few days when the moves happen – moves, which it should be pointed out, are unpredictable – you are likely condemning yourself to subpar long-term returns.

We are spending the time at my companies focusing on building organic operations so that the businesses themselves generate more cash for redeployment into stocks. The specialty retail e-commerce divisions will be launching several new sites later in the year, and I’m excited about that. We are following Carlyle’s prescription – that is, faithfully executing the work that is already on our desks, plus doing the most intelligent things possible with the cash and investments we have, striving to get a little bit better each day. With the power of compounding, I’m confident that in a decade or two, we’ll look back and this will be the time that major sources of future wealth were planted and created.

For those of you with money going into retirement accounts such as a 401k on a regular basis, this crash should work out very well for you in the long-run. You’ve been picking up more and more shares of companies at ever-dropping prices, providing more future earnings and dividends at a lower cost (assuming, of course, that you have sufficient diversification to eliminate wipeout risk).