Resilience
Four different movies, all very popular, all very memorable, and all revolving around a central theme, resilience. Seabiscuit is a story about a horse and a jockey who overcame the odds during the Great Depression. Seabiscuit became a national hero, the underdog eventually defeating the famous champion….”C’mon, Seabiscuit”. Another story written by Laura Hillenbrand and turned into a movie is Unbroken, a saga that depicts the life journey of Louis Zamperini. Her book is wonderful and the movie fills you with awe and respect for a person who demonstrates resilience in the face of unimaginable challenges.
Philadelphians take special pride in the movie Rocky. An undersized boxer, Rocky Balboa trains in unconventional ways, building his body and his mental ability to come back from being beaten down. And we know how the story ends. As a Philadelphian, I can report that when I drive past the Philadelphia Museum of Art there are always lines of people waiting to take a picture in front of the Rocky statue AND running up the iconic steps. They may even be shouting “Yo, Adrian!” when they reach the top. Rocky’s story resonates with many people.
The last movie I will ask you to think about today is a bit of a curve ball, Cast Away, starring Tom Hanks. Chuck Noland is a Fed Ex employee who goes down with the plane yet survives on an isolated island. The story follows Noland as he innovates and attempts to get out of his predicament. Strength, perseverance, and buoyancy help this survivor make it through his ordeal, along with his imagined friend, a volleyball. I hear Hanks’ voice crying “Wilson!” as I write this.
A recent piece of research which came across my desk offering investment insights got me thinking about resilience. Let me share an excerpt:
“In my 25 years in the investment business, I have never known a good time to invest. There are always a dozen good reasons why it makes sense to wait. Today is no exception…. interest rates, the President, constant strife in the Middle East, excessive government regulations, and a Congress that is more a part of the problem than part of the solution”. (1)
The crazy thing about this statement was that it was made in 1981. Yes, this comment was offered in 1981. And probably again in 1990, 2002, and definitely in 2023 by other investors. In fact, I heard several clients make similar statements this past week. Folks, markets have advanced a great deal since 1981, and in 2023 the markets demonstrated great resilience bouncing back from the beat down of 2022. It’s what markets do, and markets are made of the collective judgments of people who demonstrate resilience in the face of challenges.
My associate Liza studied resilience in her Masters of Psychology program. She shared with me some academic definitions: “Resilience is the ability to persist in the face of challenges and to bounce back from adversity.” (2) You’re remembering Seabiscuit, Rocky and Louis Zamperini right now, aren’t you? Said another way: “Resilience requires the ability to navigate adversity and grow in the face of challenges”. Tom Hanks’ character embodies this.
As investors, we are more likely to achieve successful outcomes if we recognize the importance of being resilient. According to research, many factors contribute to our resilience including optimism, effective problem solving, faith, a sense of meaning, flexibility, impulse control, empathy, close relationships, and spirituality. (3) I would add adaptability to the mix and I bet Charles Darwin would agree with me. It should be noted that optimism shows the strongest links to resilience, according to the research.
Remembering these four fun and motivating movies and learning about the research on resilience can inform our approach to investing. Endeavor to be flexible and adaptable as we plan our portfolios. Remember that we bounced back nicely from the 2022 bear market and we will bounce back from the next bear market. Let’s be sure to understand that we can grow our assets in the face of adversity, using optimism as our very own force multiplier, as Colin Powell might put it. Finally, let’s savor the process….
Ralph McDevitt January 21, 2024
(1) A quote made by Graham Holloway, as written in “5 Keys to Investing in 2024”, from the Capital Group.
(2) Masten & Reed, 2002
(3) Masten & Reed, 2002
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