When It Rains the Umbrella Man Makes Money
By Joseph P. “Chip” Williams Jr
I remember walking out of my office on 42nd Street and Park Ave in New York City…
It is five o’clock. The streets are bustling with commuters headed to Grand Central Station and Subway entrances. There are vendors with tables filled with wallets, dolls and other stuff for purchase on portable tables on both sides of 42nd Street. Not today. It is raining. The vendors are there however they have umbrellas and ponchos for sale, not wallets or dolls…
What I learned was…When it rains the umbrella man makes money.
We can learn from this experience on how to manage money. When we turn on the TV and see world events that do not sound good… What is the first instinct? I am going to lose all my money. Recently it was Covid… February 2020 shut downs begin, the stock market reacts by the Dow Index dropping from over 29,232 to 18,591 on March 23, 2020 (we experienced a 36% drop in about one month). What were the odds that the market (Dow) would be above 29,700 in November 2020 and is now at 34,721 in April 2022? It not quite doubled in two years.
What has happened in the past few weeks? Investors see that we were at a higher number a month ago. Should we sell? Is this the high?
Has this occurred before? Yes. We have had market drops and market rises.
2007 was a big correction and then we went from 6500 on the Dow to the present 34,000 in just twelve years.
In 1974 we had gas lines; interesting how fast products were added to the car which double our gas mileage.
What can we learn?
When things change, we change what we buy; then we see different companies making money, followed by buying in the stock and a rise in the stock price. During Covid, we observed increased stock buying for companies selling more medical supplies, more home goods and repairs, microchips (as supply diminished rapidly), etc…
Yes… things changed and the Umbrella Man brought out new products that we wanted to the market.
The consumer adapted and changed, therefore so did the investor. When it rains, we should ask what products can protect us? What products can meet our current needs? Is the world really ending?? Probably not – rather, it’s another rotation of products.
When it starts to rain, panic is not the solution. Look at the markets on a relative basis. As people are selling in fear, this is the time to be buying.
There are many wise sayings from Wall Street. History has shown us they are often correct...
“An umbrella can also protect you from too much sun (hot markets).”
“If the world is not ending, then buy when others are selling.”
“The Bears and Bulls make money; the Pigs gets slaughtered.”
“Know before it happens, what you will do.”
And finally…
“Diversify.”
Opinions expressed in the article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Past performance is not a guarantee of future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal.
