Imagine enduring a multi-year, even multi-decade drawdown in a venture to which you are an outsider.

There is a world of difference between wanting something to go a certain way and needing it to.

The latter eviscerates a human's clarity. Now, everything he sees and does is filtered through the lens of an outcome that simply must materialize. He starts seeing things not as they are ... but ... for what they might mean for the future he has staked a bit too much on.

His imagination is handcuffed, and all he has is hope. Possibilities that might otherwise have opened entire new worlds are now distractions, even threats, to his hope ... hope that he calls a plan.

I am told by everybody that the stock market, for instance, is about the long game. I read that it’s about “time in the market”. Compound interest, they say, is a wonder of the world.

Not surprisingly, I see people go all in on stocks and other financial assets with the belief that—in the long run—they will fare well, even if that means sustaining and holding through long periods of 30, 40, and 50 percent unrealized losses.

I know life is not linear; we have turbulent seas to navigate, and a ride free of bumps not only doesn’t exist, but it can even dim some of the character-building fun of our unpredictable existence.

I can only speak for myself. But so far ... I can't think of a single thing I can do "passively". I'm one to totally immerse myself into a venture or plain old activity. I couldn't even watch the 2026 film Odyssey without first taking a month to learn the Homer classic like the back of my hand and beyond. And I've got a wide varieties of interests, so I'm not worried about being bored as I age.

Having said this, I am just a regular person; Outside of the financials they periodically release, I don't know what’s really happening inside these publicly-traded companies.

I do know one thing, though. We are increasingly seeing companies accumulate fat valuations in private markets only to go public as multi-billion or even trillion dollar enterprises. This, to me, is a failure in what was once a vehicle for the common man to at least protect his wealth, let alone grow it.

It's no longer as simple as parking one's wealth in "the market" and enjoying a slow and steady growth. Discernment, adaptability, and vigilance ... these are now must-have skills for any man or woman entering these waters.

Disciplinary blood baths

I'm not one to talk myself into tolerating blood baths of unrealized red with no end in sight because “stocks go up in the long run”. Ask the Japanese indices how that played out, the ones that lost decades.

The Nikkei 225 hit 38,915 in December 1989. It did not reclaim that level until February 2024. Thirty-four years. An entire working life, gone, on Japan’s main equity market. The investor who bought at the top … well, he was told the same things investors are told today about time in the market.

The Dow Jones first crossed 1,000 in early 1966. It did not decisively break above that level until late 1982. Sixteen years sideways in nominal terms. That stretch also contained the inflation of the 1970s, so in real terms the total return on the S&P 500 was close to zero for the entire period. Sixteen years of “investing” with nothing to show for it.

Then the most recent one. The S&P 500 peaked in March 2000 at the top of the dot-com bubble. It crashed. It made marginal new highs in 2007. It crashed again. It did not decisively reclaim the 2000 peak in nominal price terms until early 2013.

If I’m going to ride a rollercoaster, it better be one that is deeply intertwined and aligned with my nature, because for this, I’m willing to carry the scars. This does not mean I am against the stock market. The market is a collection of waves, wave after wave, and there is a way to ride the waves without ending up sorry with a halved portfolio. There is nothing like free cash flow, I'll tell you that much.

A package deal

The public market is one of the most refined extraction machines ever built. It is designed to make one part with their money, not necessarily because there’s a shadowy group pulling levers, but because the structure itself reinforces it.

Every layer between the human and the actual value of a business is a layer that feeds on increased participation, blind or not. The broker, the market maker, the fund manager, the analyst, the media cycle that whips sentiment back and forth so that volume stays high. Volume is the blood supply of the whole apparatus.

So the real question is in what respect my energy belongs in a system where I have no proximity to the actual value creation.

This is one of the many instances of the hyper-financialization of society, and it ties directly into what I've written about the Mortgage. One takes on a mortgage, committing oneself to decades of interest payments. And to offset the enormous sum one stands to lose to interest, what is one told to do? Put those savings into the public markets, ride out those drawdowns, and let compound interest work its magic ... or so they are told.

And now ... not only must the income keep flowing to service the mortgage, but the market must cooperate as well. The recovery must come. The long run must eventually deliver. And preferably within the span of one's actual life!

These are institutionalized package deals. They depend on the premise that the wheels of the societal systems will keep spinning. They may. They may not.

But what concerns me even more is what this need does to a person along the way. They have unintentionally engineered a life where ... uncertainty kills.

When so much of one's life depends on things unfolding in a particular fashion, the mind begins to organize itself around preserving that outcome. Every decision, every opportunity, every unexpected turn of events ... is evaluated against the demands of the arrangement.

And so, one may end up spending an entire life protecting a future instead of remaining open to destiny.