Like many large U.S. cities, Washington D.C. is encircled by a busy road that (supposedly) allows drivers to bypass city traffic and arrive at their destination faster than they otherwise would. In practice, D.C.’s highway I-495 is often a mess with commuters clogging the roadway from all directions. Occasionally, however, driving on the Capital Beltway (as it is sometimes called) can be a real treat.
Such was the case last Saturday morning when my wife and I drove to our favorite place in Silver Spring, Maryland in less than 30 minutes. We had listened to the weather report which told us snow was coming sometime around noon. How bad could it be? We expected to be heading back home sometime around noon, so we were not worried a bit. After all, how bad could it be?
At 12:40 pm we began our return trip, only to find that about 2 inches of snow covered our vehicle. The snow had arrived a bit earlier than we expected, but it was light and fluffy and we did not think it would disrupt our homeward trip dramatically. Saturday traffic is always lighter, we reasoned, so it probably wouldn’t be too bad.
As we entered the highway, we were shocked at the number of vehicles on the road, but more shocked at the condition of the road – we saw little evidence of salt/sand or the mark of a snow plow. We learned later that the cold weather before the snow made the snow removal chemicals less effective, and the large number of cars on the road made it hard for the snow plows to do their job.
The road surface was an unstable mix of mushy snow and ice. But everyone was driving slowly and carefully, so we were quickly resigned to the idea that it would be a slow, but probably safe, ride home. The snow was relentless – falling at a rate of one inch per hour. The snow, once light and fluffy, was now quickly adding to the mush on the road.
We turned on the radio looking for traffic and weather updates. We learned that snow was still falling and that 495 was crammed with vehicles stuck in the slop. Duh! The reporters were earnestly telling us to stay off the roads if at all possible. It was impossible for us. We were committed to getting home.
Somewhere along the way, we began to see cars struggling to maneuver in the snow. Some found it hard to stay in their lane. Others ended up nearly sideways in their lanes as they fought against the slushy road conditions. Yet others ended up on the side of the road totally immobilized by the slick and deepening snow. We were somewhat shocked to see so many expensive sedans and sports cards stranded this way.
Farther on, our front-wheel drive SUV with new truck tires began to shimmy and slide. I grew up in Montana and have driven in snowy conditions since I was 14 years old. I know how to drive in the snow, but things were so bad that day that even my skills were sorely tested. It turns out that the snow began to stick to the tires of many vehicles (ours included), effectively making the tread (and front-wheel drive) almost useless.
At one point, we thought maybe a side road would be somewhat faster than the snowbound beltway. For a while we felt great about our choice – the roads were in better condition, there was less traffic and we were moving at higher speeds. We were even able to stop at one point and clear some of the ice from our windshield and hood that was hurting our visibility a bit.
Alas, our good luck would not last. We realized that we still needed to cross the river, and to do that we needed to get back on 495. We did so with little fanfare, but soon found the road strewn with even more cars stuck in the muck. It reminded us a little of some kind of disaster movie.
The balance of the trip featured still slow speeds, but less drama and perceived danger. We were overjoyed as we pulled on to our garage – home safe! Our return trip had taken over 3 hours.
As I reflected on this experience, I realized that it contains a number of parallels to investing. Let me offer a few:
1) We thought we could predict the outcome. We knew snow was coming, but underestimated its impact on us. Too many investors are still trying to time the market. Too many people think they have saved enough to retire. Too many people are surprised by the volatility of the market.
2) We got lost. Too often people get confused by conflicting statements about the capital markets, which investment style is best, etc. It is complicated, and it’s easy to get lost without a roadmap, which in my view is a financial plan. Investing simply “to make money” is not a good idea.
3) We took a time out to clear our vision. Sometimes, especially when the market is volatile, it may be useful to take a step back and remember why you’re investing. The future is always uncertain, but having solid goals in mind will help you stay on the path when the going gets rough. Studies show that too many people still do the exact wrong thing at exactly the wrong time.
4) Lots of expensive cars struggled. Even if you have a solid investment plan, it may struggle from time to time. No one investment style works all the time. There will be set backs and disappointments. This is simply the nature of the capital markets. Changing investment styles based on recent performance has shown to be just about the worst thing an investor can do, and unfortunately an all-too-common occurrence.
5) Unexpected developments. The snow buildup on the tires was something I had not seen in a long time, and never in this part of the country. Sometimes things happen somewhere in the world that surprise all investors. These developments are also part of the complex nature of the capital markets. Here too, a financial plan and consistent investment approach can prove invaluable.
6) Some “experts” were of no help. The road crews were trying to help, but the volume of vehicles on the road made it impossible. The media folks were offering good advice to those listening at home, but for us on the road, not so much. I am still shocked and amazed that any sane person would take investment advice from journalists. Or think that “free” investment advice from “experts” is given for altruistic reasons. If you need professional help (most people probably do), hire someone who can offer a financial plan and a sensible investment strategy. Oh, and always carry some extra food and water in your car even if you think the trip will be short!