The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward.– Amelia Earhart
We have finished the 25 hours of fasting on Yom Kippur and now we get back to stuffing ourselves. It started with the breakfast, where any calories that may have been lost fasting, were put back on and then some in the 30-minute gorge fest following the holiest of days. Now it’s on to the holiday of Sukkot. More food.
As we approach the holiday of Sukkot, many reasons are given as to why we sit in the sukkah. In the Talmud, Rabbi Eliezer says that these “booths” allude to the miraculous Clouds of Glory, which protected the Israelites during their 40 years of wandering in the desert after the exodus from Egypt. Rabbi Akiva explains that “sukkot” is a reference to actual shacks that the people used as dwellings during the 40 years in the desert.
This being a financial column it’s appropriate that another reason given is that the holiday actually has a money dimension. Explaining a reason of sitting in the sukkah, Rabbi Benjamin Blech writes, “Sukkot was the time when, in the agricultural society of old, farmers found themselves the wealthiest they would be all year. It was the time of the harvest. The granaries were full. They were blessed with far more than their immediate needs. It was their moment of affluenza. So the Torah commanded them to leave their homes and to sit in simple frail huts through whose coverings they could look up at the heavens and remind themselves of the source of their blessings. They needed to recall, in a festival appropriately named ‘the season of our joy,’ that true happiness comes not from our possessions but from our priorities, not from what we own but from who we are, not from our mansions that offer physical comforts but from our families with whom we create everlasting bonds of love and affection.”
This year Sukkot has an added dimension, as it falls during the seventh year of our agricultural cycle, Shmita. Farmers in Israel are required by Jewish law to keep Shmita, letting their fields lie fallow for a full year, once every seven years. Among the many reasons given for this command, Rabbi Lazer Gurkow writes, “The laws of Shmita were binding upon our ancestors only after they settled in Israel. When we toil and labor over crops that we grow, or other forms of income that we generate, we can grow proud of our achievements and take personal credit for them. We are liable to forget that God’s blessing is the sole reason for our success. We are liable to forget that God gave us our land and our seed; that He made the rain fall, the sun shine and the crops grow. Shmita reinforces our faith in God’s providence over our affairs.”
As happened in the last Shmita cycle, many clients asked me if they should sell out of their investment portfolios as markets have had a rough time during past Shmita years. They point out that over the last seven cycles, markets have had very sharp falls. Years ago I looked into this before I read anything about it, and discovered the interesting trend. Sounds scary, no question. But if you take a step back and look at the data, it includes years which markets dropped after the seventh year was over, before it begins, etc.
What you see is that it’s actually parts of three years of the seven-year cycle where bad things have happened. That’s almost 43% of the time. As I have written many times, markets go up and markets go down. In fact, they do so during all seven years of the cycle. On average, markets drop at least 10% once a year. Will we see at least a 10% correction over the next 13 months? There is a statistically good chance. Should you be worried? Remember that short-term volatility happens all the time, and markets can and will drop. The most important aspect in determining how to react to market jitters is to figure out what your time horizon for the investment is. If you have a short- to mid-term time horizon, you have no business investing heavily in stocks. If you have a 6-7 year or longer outlook, short-term swings shouldn’t cause worry and you should keep your eye on the long-term performance of the stock market. In addition, if you sell out you may be on the hook for a significant capital gains tax bill.
Hag Sameach! The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
The writer is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il