(with special thanks to Nick Murray for making it clear once and for all!)

Let's start with the following scenario. On October 9, 2007, the S&P 500 index made it's all time high reflecting the mood and sentiment of investors in American business. By March 9, 2009, the S&P 500 had dropped 57% which had never happened before during our lifetimes. We didn't know when it peaked, we didn't know how long it would last and we didn't know when it ended. The banking system in the US failed and was propped up on the back of tax payers, the lenders of last resort. The credit function around the world ceased to exist and it happened quickly. The subsequent rally and recovery roared back 80%, the most significant rally in our lifetime.

1)      I will never have any idea what the economy is going to do in the next 12-18 months.

2)      I will never have any ability to anticipate what the market is going to do over the next 12-18 months.

(Buffett's best friend Charlie Munger commented on the same clairvoyant ability, "We don't think anyone else can either and we're just as good at not knowing as they are.")

3)      The more traumatic the next series of economic or market events, the less likely I will be able to anticipate them or time them.

4)     (a) There is no statistical evidence for the persistence of performance. Future performance is random as compared to past performance.

(b) At critical turning points in the investor’s lifetime, relative performance will not save you; it isn't going to matter.

5)      The world did not end, because it does not end.

(Warren Buffett commented, "The system is incredible at unleashing the power of human potential. It isn't going away.")