In March of 1993, legendary North Carolina State University basketball coach Jimmy Valvano took the stage at the ESPY Awards in Madison Square Garden to accept the inaugural Arthur Ashe Courage and Humanitarian Award. Valvano was ill and weak from his personal fight with cancer. Facing his own mortality, Valvano summoned the strength to deliver a passionate speech that included the following passage:
“To me, there are three things we all should do every day. We should do this every day of our lives. Number one is laugh. You should laugh every day. Number two is think. You should spend some time in thought. And number three is, you should have your emotions moved to tears, could be happiness or joy. But think about it. If you laugh, you think, and you cry, that’s a full day. That’s a heck of a day. You do that seven days a week, you’re going to have something special.”
Valvano would sadly lose his battle with cancer 55 days later. I think his words are worth revisiting in the context of recent events.
The Facebook – Cambridge Analytica scandal and subsequent media fallout highlights that we live in a world in which outside influences are increasingly seeking to provoke us emotionally whether it be through the internet, TV, newspapers, or in our daily interactions. This is not the type of genuine thought and emotion Valvano was speaking of. Yet, it is hard to resist getting swept up.
If we are not careful, this relentless battering from external stimulus could push us in one of two directions. Our individual passions could divide us as a society. Our nation is as split today as it has been in decades, along multiple fault lines. Or at least that is what we are told. The other end of the spectrum is total apathy. After all, if we cannot trust anything we are told, then why listen? Why bother exploring anything outside our immediate purview?
It is important to fight both temptations. In keeping a clear, open, and balanced mind we allow ourselves to have constructive debate, learn from our experiences, and improve. This is as true in investing as it is in life.
We are currently witnessing a period of relatively volatile financial markets as rising interest rates and fears of escalating global trade tensions have shaken the investment community’s confidence. The financial media has alternately proposed that we are approaching the end of an extended bull market, are on the brink of a global trade war, or are headed towards the best buying opportunity in years!
As an investor, market volatility increases the importance of remaining calm, blocking out extraneous noise, and focusing on the factors that affect the fundamental value of the investments that we own on your behalf. I would emphasize that fundamental value and market prices are not the same thing. The former is driven by economic factors (e.g. industry demand, industry supply, competitive positioning), while the latter is driven by human psychology and is inherently unpredictable.
We cannot know or control the short-term movements of financial markets. We can however use volatility to our advantage if we remain calm and objective. Willingdon’s time-tested research methodology provides the framework for identifying opportunities where an asset’s price may have diverged from its fundamental value in either direction. We remain focused in this unpredictable environment on continuously improving the quality of our portfolios to best achieve your long-term investment objectives.
Hopefully, knowing we are hard at work protecting your assets will make it a little easier to tune out external influences and embrace the type of genuine thought and emotion that Valvano encouraged us to strive for.
I was reminded recently of a great example of how captivating human emotion can be in its unfiltered, uninfluenced form. Every March, our nation gets swept up in the excitement of the early rounds of the NCAA Basketball Tournament. We do not watch the tournament to see basketball played at its highest level. We have the NBA for that. We also do not watch in the interest of seeing evenly matched competition. The higher seeds often pummel the upstart underdogs (at least most years).
We watch to see and feel the emotions displayed by players who have practiced their whole life for a chance to live out their dreams on the biggest stage. For one team there will be victory and elation. For the other, defeat and despair. In those moments, the emotions at both extremes are so pure that the players have no hope of containing them. We cannot help but feel along with them.
It was this type of genuine, human engagement that Valvano valued knowing his life was nearing its end, not the fame or fortune he earned during his successful career as a coach and broadcaster. We would be wise to listen to his advice. I will let Valvano have the last word:
“Cancer can take away all my physical abilities. It cannot touch my mind. It cannot touch my heart and it cannot touch my soul. And those three things are going to carry on forever. I thank you and God bless you all.”
Matthew Haddad, CFA