2/9/24 7:00 AM - Lesezeit

Everyone Gets Wet Eventually

Robert Karas

Chief Investment Officer, Partner

“Old Raab* used to say: 'If it rains long enough, everyone gets wet'.” I immediately overloaded this statement with profound philosophy. The world of investing came to mind. What else! Namely, the forefather of investing according to the value philosophy and mentor of Warren Buffett: Benjamin Graham

Graham was born in 1894 and amassed a fortune during the great bull market of the 1920s. He was dubbed a financial genius, but then lived through the bitter years of the Great Depression. At the end of 1920, the Dow Jones Industrial Average stood at 300 points. At the low point in 1932, it had plunged to just 41. After a price drop of 86%, in the end “everyone got wet”. That's my train of thought. 

The worst stock market years in history

A brief look back at the annual returns of the Dow Jones Industrial Average, or the Dow for short – a price-weighted index of 30 stocks that still exists today:

1929: -17.17%
1930: -33.77%
1931: -52.67%
1932: -23.07%

Graham could not escape the stock market environment. In total, Graham's investments suffered a 70% setback. It rained long enough to drench even this financial genius. 

This period shaped his investment style for the rest of his life. Only when a company traded below its intrinsic value did it provide the necessary margin of safety for him to act. But Ben Graham persisted in investing, never giving up. He eventually became an investment legend that still shines today.

The stock markets are currently scaling new highs. A time when I can treat you, dear readers, to some scary stock market history. Because looking back at the 1930s makes us all shudder. 

No one can look into the future. And no one can guarantee that there won't be difficult times again. This makes it even more important to have a clear investment strategy and discipline in good times (like now). Coupled with the determination to apply these fearlessly even in the face of headwinds, we are prepared for anything. 

*The “old Raab” was the groundskeeper of my Wienerberger tennis club a long time ago. The quote was preserved by Chris, who, together with his family, continues the soul of the club today. He remembers old Raab philosophizing on the court in the most wonderful Viennese dialect, when it started to rain. The expectation of the statement, however, was that the rain would water all the courts and thus save him the work of sprinkling them. Not the people were meant, but the reddish clay courts. So much for my profoundly philosophical interpretation. 

Disclaimer: This is a marketing communication: Investment in financial instruments is subject to market risks. The tax treatment depends on the personal circumstances of the respective client and may be subject to future changes. Bank Gutmann AG expressly points out that this document is intended exclusively for personal use and for information purposes only. It may not be published, reproduced or passed on without the consent of Bank Gutmann AG. The content of this document is not based on the individual needs of individual investors (desired return, tax situation, risk tolerance, etc.), but is of a general nature and is based on the latest knowledge of the persons responsible for its preparation at the time of going to press. This document is neither an offer nor an invitation to make an offer to buy or sell securities. The information required for disclosure pursuant to Section 25 of the Austrian Media Act can be found at the following web address: https://www.gutmann.at/en/about-gutmann.

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