How to THINK When the Market Drops – Part 1 of 2

Are you feeling a little bit rattled by the stock market decline of the past few days? Or maybe you doubled down on bitcoin and are watching it continue to decline. OF COURSE! Don’t worry my man, we’re all looking around wondering what’s up right now. You and I are both people who like to think about investing wisely and we’d be remiss if we didn’t take note of a big ol’ dip in the charts. But, whatever the external cause of your anxiety, there are a couple of principles that you need to keep in mind any time that markets hit the panic button and cries of “the sky is falling” begin to ring out.

Warren Buffett said two things that we’ll use to hatch a plan of action for today. First, personal fear is your enemy, and second, widespread fear is your friend. In other words, when you see everyone panicking, lick your chops because opportunities are headed your way; but, when you are running scared you will be at your worst.

Personal fear is your your enemy

Warren is a great guy by all accounts, but let me point you to a story from the Scripture that I think bears this out. There was once a king named Jehoshaphat who ruled Judah (one half of the Kingdom of Israel), and he came up against some trouble. Long story short, this God-loving king noticed that he was getting flanked on both sides by armies that were much, much larger than his. It was two attacks at the same time, out of nowhere, neither of which he could have reasonably defended against on his own. He had every reason to be fearful – one could even argue that his situation was MORE dire than a 1,500 point drop in the Dow Jones.

Jehoshaphat took a moment to detach from the chaotic climate in the war room and speak some truth. He said this: “Lord God…you rule in heaven over all the world’s nations. You have power and strength. Nobody can defeat you. You are our God”. Decent place to drop anchor huh?

The next thing Jehoshaphat did was to ask God how exactly he would have Judah deal with this problem, and God (what a guy!) answered! He sent a guy whose day job was as a temple-worker to the king, where he announced, “Listen to me everybody – The LORD says this to you: do not be afraid. Do not worry about this large army. The battle is not your battle, it belongs to the LORD”. Then the king got some specific instructions to put singers out front instead of the best soldiers. Just to clarify, singers were not the battle hardened studs among the Judean army. They were… well they were pretty much exactly what you’re picturing.

I love how this story ends. Of course the LORD made good on his words and Judah was victorious, but that’s the not the end. The place where this battle was fought became famous. Many years later, people called it ‘the valley of blessings’. The place where every reasonable person would have said “yeah THAT place is going to be known for a slaughter”, became a place that future generations looked back to when they needed to steel themselves against personal fear. And it was all architected by the LORD, who is trustworthy. And loves singers.

The moral of the story is that Jehoshaphat went to the LORD alone for provision in his time of need, and you should do that as well if you’re feeling anxiety, fear and stress. James 4 says not to speculate about the future, and Revelation 12 says that the only outcome of trying to save your own self is that you lose everything. Take a cue from J-phat and, while you’re at it, why not ask for whatever valley in which this battle happens to become your own little valley of blessings? I dunno but maybe your Father would be game for that!

Today you might be tempted to comfort yourself with reminders that the market is up 74% since the year 2000 despite multiple ‘crashes’, that the S&P 500 has never lost money over a 15 year period, or that valuations are not pointing towards another Black Tuesday. That stuff is all true. These data should be a part of your decision matrix as you faithfully steward the assets the LORD has given to you. This should not, in any way, be the place where your hope lies. That would be the LORD – who gave you assets to invest in the first place.

Widespread fear is your friend

Buffett nails it again – when you see panic in the people, it often means that you’re being served up a hot plate of opportunity. Take some ground!

Generally when we see a big group of folks running around in a panic in scripture, it’s a good idea not to be a part of that group. Usually they are about to start killing each other, and they are usually not on the God-fearing team. Let’s check a few examples:

• 1 Samuel 14 – Jonathan went out for a walk and sees an entire Philistine raiding party and camp. Despite his armor-bearer’s protest, he knows that if God wants to hand over his enemy it would be no big deal. “Maybe God will work for us. There’s no rule that says God can only deliver by using a big army. No one can stop God from saving when he sets his mind to it. Next thing you know, “a terrific upheaval in both camp and field, the soldiers in the garrison and the raiding squad badly shaken up, the ground itself shuddering—panic like you’ve never seen before!”.
• Joshua 10 – In a familiar story, a bunch of nations were banding together in an effort to wipe Israel off the map. When the soldiers lined up to fight (in a similarly familiar story), “The LORD threw [the Amorites] into confusion before Israel, so Joshua and the Israelites defeated them completely at Gibeon… God pitched huge stones on them out of the sky and many died.” Widespread panic was a fantastic opportunity for the lesser army that Joshua commanded!
• I’d also say that our example of the singers from 2 Chronicles qualifies as evidence that widespread fear often means an opportunity to take ground. There are many, many, many more of these in the story of Israel.

So what does this mean when the stock market drops a bunch? Should you go buy the S&P right this instant!? Take ground while the confused Philistines chop each other to bits!? Hold off there cowboy. Let’s consider two proverbs side by side.

Proverbs 29:25 – Fear of man is a dangerous trap, but to trust in God is safety.

Proverbs 28:20 – A faithful man will abound with blessings, but he who makes haste to be rich will not go unpunished.

Might I just encourage you to hold these two principles in tension? The world knows that any effort to time the market is a fool’s errand. So this isn’t about waiting for a dip so that you can shove all your money in there and outsmart everyone. The plan for a downturn that is anchored to these wise ways of Warren Buffett, Jehoshaphat and Joshua.

Today you might be looking at your account balances and thinking “I had so much more yesterday, what if this downward trend continues, I’ll be broke!”. That’s personal fear. Your first order of business is to take a dose of Jehoshephat’s medicine (reminder: he paused for thanksgiving, reminded himself of the LORD’s total control, and then asked God how he should proceed). Once that personal fear is dealt with, you might look around and see everyone else in a tizzy. You may be in a great position to take ground while the rest of the world is in a fearful panic! Lest you fall victim to a hastily executed bad idea, remember that every time the LORD delivered his people, he first gave them instructions. So wait on the LORD, and be ready to obey should He speak!

Now that you know how to THINK when the market takes a dip, would you like to hear specifically what I’m going to DO? Fine then, that article is right here.