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Excessive greed and fear are the emotions that drive the public markets.  Sometimes fear and greed can double time you, which is expressed by FOMO (the fear of missing out.)  Too often emotions cause individual investors to take costly actions.  What I hope to help you avoid is buying high and selling low. 

In my career as in investment advisor over 36 years, I have seen extreme market drops that created fantastic opportunities to BUY stocks.  Instead, many individual investors were overwhelmed with fear and chose to SELL. 1987, 1994, 1998, 2000, 2008, and 2020 were some of those times of deep drops and down markets. My efforts to offer proper perspective and prudent, rational advice to investors was unsuccessful.  The power of the fear emotion was too strong; “Get me out,” was the response.  Less so in the 2020 “Virus Crisis” bear market because it happened so fast, but the steep sell-off in stock prices caused most investors a lot of FUD (fear, uncertainty & doubt).

You wouldn’t be human if you didn’t fear loss.  No one likes to lose.  Especially money.  Behavioral finance studies have determined that people feel the pain of losing money more than they enjoy gains.  Natural instincts cause us to want to flee the market when it starts to plummet, just as greed moves people to jump back in when stocks are soaring. Both can have negative impacts.  While many investors have lost money in the stock market, they didn’t have to.  Here are 3 things you can do to avoid losses in stocks and should keep in mind particularly during down markets: remember your time, do your homework, and control your emotions.  It’s time in the market, NOT market timing that determines your investment success.  Remember your investment time horizon when the fear driven desire to sell hits.  Knowing yourself and knowing your investments will reduce the urge to sell in a down market.  Do the necessary homework to understand the stocks you own.  Ask yourself, “Will the company’s product or service remain in strong demand beyond the temporary down market?”  Lastly, do your best to control your emotions.  Fear and greed are awfully strong but reminding yourself of your investment years ahead and your confidence in the long-term prospects of the companies you own can make you a stronger investor. 

Here are three helpful facts to keep in mind.  Keeping proper perspective should help you overcome the power of emotions and fight the urge to sell in down markets:

1.  Down markets are normal

History has shown us that stock market declines are an inevitable part of investing. Down markets are normal.  There are two kinds: corrections (defined as a 10% or more decline), and bear markets (a 20% or more decline).  The good news is that these and other challenging market downturns don’t last forever.  The table below show the S & P 500 Index has typically dipped at least 10% about once a year, and 20% or more about every six years, according to data from 1950 to 2019. (The 2020 bear market fell over 30% and  fully recovered to pre-crash highs in 6 months).

•  Its time in the market, not market timing

Every S&P 500 decline of 15% or more, from 1929 through 2019, has been followed by a recovery. The average return in the first year after each of these declines was 54%.  However, investing is like buying a raffle ticket, “You must be present to win.”  As the chart below shows, just being out of the market on its best days can take a toll. A hypothetical investment of $1,000 in the S&P 500 made in 2010 would have grown to more than $2,800 by the end of 2019. But if an investor missed just the 10 best trading days during that period, he or she would have ended up with 33% less. 

•  Diversification matters

“Don’t put all your eggs in one basket.”  You heard that before.  The inference is to diversify your investments. Diversification can help lower volatility and help to reduce some of the stress of down markets.  A diversified portfolio doesn’t guarantee profits or provide assurances that investments won’t decrease in value, but it does help lower risk.  As the chart below shows, investment asset class performance can swing from first-to-worst, and vice versa from year to year.  How you diversify best is to be clear on your risk tolerance, time horizon, income needs and other investment parameters and constraints unique to you. 

You can control your emotions with your investments.  The that end, I hope these considerations help. 

As the world continues to open up after the pandemic, people are rediscovering the great outdoors and the All-American road trip. Since air travel is still rather challenging, the family car is the easy answer to a quick getaway. Part of California’s beauty is that so many wonderful places can be found very close to home. Like vineyards, for example. Up and down the state, vineyards and wineries are opening their doors to guests to sample their wares. With regulations still in place about indoor gatherings, some wineries have set up outdoor tastings in the beauty of nature. What better place to relax and sip wine than in the rolling hills of the very vineyards where the wine grapes were grown? What could be more perfect?

The weekend is the ideal time to venture out into the world in search of a decent bottle of wine. Or two. California’s wine country now officially runs the length of The Golden State. From the northernmost Mendocino County where crisp sparkling wine flows abundantly, to the famed soils of Napa and Sonoma, to the up-and-coming Paso Robles vineyards, and historic San Luis Obispo and Santa Barbara, to the southernmost vineyards of Malibu, Temecula, and San Diego County, and all the areas in between, there is good wine to be found in California. Get out your map! The time is now.

But where to begin? Why not start with the areas that specialize in the wine styles that you favor? If you are a fan of powerful, fruit forward Cabernet Sauvignon or oaky, buttery Chardonnay, the Napa Valley is the place for you. If burly, jammy Zinfandels excite you, head to the mountains and the vineyards of the Sierra Foothills. If you prefer crisp, minerally Riesling or fresh, earthy Pinot Noir, better set off for Monterey County. And if you don’t have a favorite style or region, just wait! You soon will.

Many wonder about the etiquette of wine tasting. Is there some sort of format that one is expected to follow? What exactly should the taster be looking for in a wine? How can one determine if a wine is good or bad?

One quick way to remember how to taste a wine is to think of the ‘Five S’s – See, Swirl, Sniff, Sip, and Savor. First, look at the color of the wine. It should be clear and bright, never cloudy. A youthful white wine will generally be a pale lemon color. A deeper color may indicate age. A red wine in its youth may be purple to ruby in color, depending on the variety. An aged red wine will have garnet hues. Swirling the wine will let you appreciate the color more fully, allow you to see the consistency, and open up the wine’s aromas.

One good sniff can determine a wine’s condition. No wine has ever been created to include aromas of wet cardboard, horse manure, vinegar, or sherry (except, of course, sherry itself!). Outside of these definitive faults in a wine’s aroma, a taster can be fairly certain that a wine is “clean” or untainted. This is why a sommelier will open a bottle and pour a small amount to taste before filling glasses at a table. An experienced nose can identify a flaw at first whiff and send away an offending bottle if need be.

When sniffing a wine, you are observing the condition and intensity. Do you have to stick your nose in the glass to smell the wine, or do the aromas rise to greet you? You must look for identifiable characteristics, which may include fruit, floral, spice, and earth. Sipping a wine pulls everything together. You can determine if the wine is dry or sweet, the alcohol, acid, and tannin levels, the body, and the flavor characteristics.

When savoring a wine, you determine its length – that’s to say, how long the flavors remain in your mouth before fading. A good wine will leave lingering flavors long after you have swallowed. An inferior wine will disappear immediately, or worse, leave you with a bitter or unpleasant taste. The final impression is often what makes or breaks a wine.

Remember – if you like a wine, it’s good! Don’t be intimidated by what you think you are supposed to like or not. Variety is the spice of life and makes the world go round! Just because a wine is expensive, doesn’t mean it’s good. There is honestly no right or wrong, just different preferences. That’s why winetasting is so much fun – there’s always something for everyone.  

Many vineyards offer tastings by appointment only. Be sure to book in advance to avoid disappointment. The world is opening back up again. Get out there and taste some wine!

Cheers!

Q. I enjoy Mexican food and other spicy foods, so I’ve been reading up about Chili Peppers. I’m now eager to plant a few, but there are so many varieties. Which varieties do the best in this area?

A. The popularity of Chili Peppers is increasing as more folks enjoy hot and spicy foods. Location, location, location is a key with Chili Peppers as they like warm days and nights to produce. They must have nighttime temperatures over fifty-five degrees. May is an ideal month to set out transplants or seedlings started in mid-March. In most years, the rainy season has concluded, and we are warming up. Seeds started today will be ready to the open ground in eight weeks, so I look to plant transplants. Chili peppers can be grown in containers as well as in the open ground. There are so many varieties because of the demand for hot and even hotter varieties. Hence, the right variety for you is directly related to how much heat your month is ready to accept. The chemical, which gives chili pepper its heat, is called capsaicin. They will also accumulate heat as it matures, so they’ll be milder when they’re green and hotter as they ripen to a deep red. The hottest part of the chili is the white flesh that attaches to the pepper’s seeds. This is removed if you want to limit the heat.             William Scoville is credited with inventing the Scoville Heat Unit Scale (SHU), which measures Chili Peppers’ pungency. Bell or sweet peppers have a zero-rating. Here are a few of the hot peppers and their ratings: Jalapeno 10,000 SHU, Cayenne, 30.000 SHU, Habanero, 100,000 SHU. You may also find the Ghost Pepper, Bhut Jolokia, one of the hottest in the world at 1,000,000 plus SHU that’s four hundred times hotter than Tabasco Sauce. I’d recommend that you pick a couple of varieties to try out and then see for yourself if your yard adequate for more.

Note: Capsaicin is an irritant and key ingredient of Malice or pepper spray. It’s essential to either use gloves when handling chilies or thoroughly wash hands afterward. Anyone who has inadvertently rubbed his or her eyes after handling a pepper will know why.

Q. My neighbor has left me several twenty-four-inch pots. What can I plant in them that like lots of sun and are evergreen?

A. Today’s trend in container gardening is to plant many different types of plants such as ornamentals, grasses, succulents, herbs, and edibles in a single container. Typically, if it can be planted in the ground, it can also be planted in a container; hence, you have a wide and varied selection of choices. Citrus is by far the most popular individual plant in a pot. To start, I’d use sunset magazine or any other gardening publication as a source of inspiration. You’ll find many examples of mixed containers being used to enhance areas such as entryways, decks, and patios. You’ll need a tall focal point for a twenty-four-inch pot, a few medium-size plants, and then something low to use as filler. I’d use mounding or cascading plants as filler, so they spill over the sides to soften the sides of the pot. Here are a few suggestions for a focal point. Nandina, Heavenly Bamboo, has beautiful foliage color, gets berries in the fall, and is visibly light and airy. New Zealand Flax looks like a giant grass and is very sculptural. Dusty Miller has silver-gray foliage with yellow blooms in the summer. Any of the many types of grass-like Variegated Ribbon or Dwarf Fountain Grass can also be used. You could surround the focal point with the pink flowering Society Garlic or Lily of the Nile with blue flowers. They are available with both gray and green leaves. The yellow foliage of the Summer Gold Agapanthus is striking. Another option is the maroon leaf Corral Bells. Filler plants include Verbena Tapen, Million Bells, or Bacopa, which will flow over the containers’ sides. Seasonal color like Marigolds, Impatiens, Pansies, Iceland Poppies, Alyssum and Trailing or Upright Lobelia is added to complete the year-round color scheme. Do not forget that Parsley, Basil, and Rosemary make a dramatic impression in mixed containers. The containers can be identical. However, I’d prefer to mix the combinations up. I might reverse the foliage color between the focal point and the surrounding plants, using the filler plants to accent the groupings. Once you have an idea of what you want. I then visit your local garden centers a view of what’s available

A couple of final thoughts, the containers are kept fresh looking by changing the seasonal color. It takes very few plants or time to give them a new look. The biggest maintenance issue is water and nutrients. You have perfect drainage in a pot, so I’d water them daily when the temperatures are over seventy-five degrees. The containers should also be off the ground to allow the water to flow freely out the bottom. Some type of mesh or screening material is placed at the bottom, so the soil doesn’t wash out and feed every four months with Osmocote. It releases a little bit of nutrients every time your water.

I find even the title of this movie intriguing.  It just kept popping up and I kept telling myself that I would eventually watch it.  It got some notoriety but not enough for me to find where I could see it and commit to a “now” viewing.

Then the Oscars came in sight.  The more I saw, the more I realized that as usual, I wasn’t missing much, and might I add, most of the viewing audience agrees with me.  Oscar Night came and went and I decided to at least watch the one that won the most awards.  Big Mistake!!  Of course, that’s one woman’s opinion.  Nomadland left me depressed and wondering why.  It took me a while to process Nomadland and after processing, I still didn’t like it.  Enough said.  You may have liked it, I certainly did not. 

Moving on.  I waited a couple of days and started wondering, once again about News of the World.  I jumped into the deep end of the pool.  I not only rented it, I purchased it.  What could go wrong with a Western starring Tom Hanks:  The man who picks some unusual films (topics) and always delivers!  Hanks “picker” is either better than mine or he has enough pure talent to light up any screen. 

Looking at the storyline, I settled in for an uneventful evening, snacks at the ready! At the very least I would be treated to an extraordinary performance.  I was not only not disappointed, I loved every minute of News of the World!  The pacing of the film was perfection, the acting impeccable, the story line intriguing.  The musical score by James Newton Howard was just the icing on the cake!

I’m a bit of an American History buff.  News of the World is an American Western drama film co-written and directed by Paul Greengrass, and based on the 2016 novel written by Paulette Jiles.  In 1870, Captain Jefferson Kyle Kidd, a former Confederate soldier who served in the 3^rd Texas Infantry, makes a living traveling town to town reading newspapers to local residents for ten cents per person.  Following an evening of news reading, Kidd packs up and heads to his next location.  He comes across an overturned wagon on the road.  Looking closer, he finds the body of a hanged black freedman and a very much alive young white girl named Johanna dressed in Native American Indian dress and speaking Kiowa.  He returns to his journey,   Johanna in tow, and down the road they run into a Union Army patrol.  He’s told to take her with the Bureau of Indian Affairs paperwork he had found, to the next settlement so she can be returned to what’s left of her family, an Aunt and Uncle.  Kidd decides to deliver her.

At the outpost, Kidd is informed that the outpost’s Bureau of Indian Affairs representative won’t be back for another three months and is told that he should take her to her family. 

The journey begins and because I hate to spoil the movie, you will have to watch the movie yourself to know what happens.  Just know it will be worth it!

I am a true movie geek.  I actually have hundreds of real DVD’s, even my own children think that’s a little weird.  What I love about watching a DVD is the Bonus section after the credits run.  I seem to always have a million questions about the cast, the crew, and where it was filmed.  This film’s bonus clips were pure pay dirt. 

Tom Hanks, is not a spring chicken anymore and that’s really okay.  He has just gotten better with every film and every gray hair. What I found in the  Bonus section is that Hanks did almost all the riding, climbing and other physical parts of this film himself.  He and Johanna (Helena Zengal) were a real team tackling the reality of a trek across Texas.  The Director said that Helena, whom he found in Berlin, Germany was the absolute best child actor he had ever known.  She actually learned to speak Kiowan as well as English.  She also used her native German in the film.  Many of the local Indians from the Kiowa tribe were brought in to teach the cast and crew what they needed to learn and they said they had never seen someone who was not Kiowan learn the language.  Many of the tribe were used in the film as well.

If you’re now saying, “what was the name of that movie?”  It’s News of the World.  It didn’t sweep the Oscars but it got two pages of nominations of every kind. Do yourself a favor and check it out!  Let me know what you thought at carolyn@carolynhastings.com