Is Now a Good Time to Invest?

Throughout our careers, there is arguably one question we find ourselves fielding more than any other: “Is now a good time to invest?” This is a fair question—nobody wants to deploy capital into markets at the “wrong” time. But what defines the wrong time? Is it when your favourite financial publication is making hyperbolic headlines? Or when that guy at your weekend barbecue starts talking about his recent gains?

We are strong proponents of thinking and acting for the long term, buying and holding, and maintaining a “glass half full” mindset about the future.

If it were a choice between being permanently bullish or bearish, the decision for us is clear: bullish, every day of the week. Take, for example, legendary investor Peter Lynch’s famous quote:

But does that mean there won’t be bad times in the stock market? Of course not. The simple truth is that bad things can and will happen. They are inevitable.

If you were to do some back-of-the-envelope retirement projections for someone who is currently 40 years old and looking to comfortably retire at the ripe old age of 65, you may want to consider what the world—and the market—might have in store for them over the next 25 years.

In those two-plus decades, there will likely be two to three recessions, three to four bear markets, at least one significant market crash, perhaps a financial crisis or two, geopolitical crises, wars, political upheavals, and events entirely out of left field (like a pandemic).

No one knows these events with certainty, but with history as a guide, it can be reasonably assumed that they will likely happen. We know bad things will happen, and yet we continue to invest for the long haul, optimistic about the future.

In Devil Take the Hindmost, Edward Chancellor’s book on the history of speculative investing, he provides chapter-long summaries of some of the world’s biggest market melt-ups—from the Great Depression to Japan's crisis in the 1980s and even as far back as the Dutch Tulip Bubble in the 1600s. Through these historical accounts, it’s clear that while each event is unique, human behaviour remains remarkably consistent.

In short, we get overly excited, we go too far, and then the good times end.

Learning from these moments in history has undoubtedly made many—including ourselves here at Bratton—better investors. They serve as cautionary tales of hubris, showing how the humble, steady approach wins over the long term. No one learns from a bull market—it’s the trials over time that shape a battle-tested investment philosophy.

So, with these examples of downturns, recessions, wars, crashes, and pandemics, how does one stay invested? In short, it’s because things always get better. Our history is filled with progress, innovation, determination, and rising standards of living.

We started the 21st century with the Dow Jones at 11,497 points. Since then, we’ve seen three major wars, three recessions, two 50% market crashes, and a pandemic. And yet, here in November 2024, we observe markets at all-time highs.

The Takeaway: Whether or not now is a good time to invest all depends on your time horizon.

Source: X.com @morganhousel 21/10/2024

Many global equity markets have a historical average annual return of ~10%, despite including the events noted above. You must take the good with the bad.

What we know is that, to date, the good has always outweighed the bad, and we expect that to remain the case in the future. This is why the question should be less about whether it’s a good or bad time to invest, and more about your strategy. Most investors will be well-served by limiting their entry risk and deploying capital in staggered, systematic tranches. Then play the long game!