The Triad Perspective

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Let Them Eat Cake (But Not Have It Too)
We've all heard the phrase "You can't have your cake and eat it too." Which, when you think about it, seems obvious. Unless it seems confusing. How could I have my cake if I eat it? Let me provide a little history.
Way back when, this proverb started out life around the 15 th century as " You can't eat your cake and have it too ." Simple and straightforward. By the 17 th and 18 th century, things got flipped around. Now the common phrase became the less straightforward, more confusing variety: " You can't have your cake and eat it too. "

A little bit of additional history. The infamous "Unabomber", one Theodore J. Kaczynski, was finally caught by the F.B.I. when his brother identified Ted's particular use of this phrase in his 35,000 word anarchist manifesto. It seems the Unabomber's mother taught him that the proper form was "You can't eat your cake and have it too." For the record, I agree with the Unabomber.
I get to thinking about this phrase when we get temporary stock market declines, such as we've been experiencing for the past three months. It reminds me that we can't have it both ways. If you want the higher returns that come from investing in the stock market over the long-term, you've got to put up with the stomach-churning declines that occasionally occur.
We can't expect to "eat" our cake--earning higher returns--while also "having" our cake--avoiding the emotional roller coaster that accompanies market declines.
And make no mistake, market declines can be hard emotionally. I've been doing this for over 30 years and it's still no fun. It's way more fun when markets are rising and clients are making money.
But the weird thing about market declines is they can prove to be advantageous to your financial health. To paraphrase Warren Buffett: "If you're going to be buying hamburgers-or investing in stocks-then why wouldn't you want the hamburgers occasionally offered at a big discount?"
Warren's got a point...though it depends on where you are in your investment/spending lifecycle. When the market declines, stocks can be on sale, and bargains might be plentiful.
Even the Unabomber, now serving eight life sentences, would probably agree that you can't eat your cake--causing mayhem--and have it too. Thanks to the F.B.I. And brother David.
-John Heldman, CFA

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