Have you ever heard of Lake Vostok? No, it is not a tony resort outside Moscow. In fact, no one has ever taken a vacation there. It is located under more than two miles of ice not far from the South Pole.
Lake Vostok is the largest of nearly 400 sub-glacial lakes in Antarctica. It is about 160 miles long and 30 miles wide-the size of Lake Ontario. It has been locked in icy darkness for about 20 million years.
Earlier this month, a team of Russians drilled down to Lake Vostok. They reached it after more than two decades of drilling. Their perseverance alone is noteworthy. But their feat is even more remarkable when you consider that they worked at high altitude-more than 11,000 feet above sea level-and encountered temperatures as low as -128 degrees Fahrenheit.
Scientists are excited about what they might learn from the lake. They hope to find microbial life forms that existed before the ice age. These life forms may teach us lessons about evolution and could even provide clues about life elsewhere in our solar system. I hope the lake unlocks many secrets.
To me, however, the story of Lake Vostok is about patience and endurance. It isabout keeping your eye on a goal through adversity. These virtues are not secrets-we have learned about them since we were young. But sometimes it seems we have forgotten them. We want everything to be quick and easy.
Those of us who have been in the investment business for a while know that for long-term investors, good things don't come quick and easy, as much as we might like them to. Sure there are occasional periods when the wind is at our back and we make progress without much difficulty. I imagine the Russians had a few sunny days down in Vostok Station, too. But mostly, investing is about hard work, patience and endurance. Success requires keeping your eye on the goal and pushing through adversity.
For most investors, living through 2008 was the equivalent of encountering -128 temperatures at the South Pole. The pain was severe-unlike anything they had anticipated. Many of them simply folded their tents and headed to warmer climates. They put their money in T-Bills or CD's and vowed never again to venture into the frozen reaches of the stock market.
Every day the news confirms their decision. The economy is troubled, unemployment is high and there are debt problems in Europe and at home. It looks like two miles of ice. Better wait 'til the sun comes out.
Some of these people got tired of waiting for the sun to come out, but they weren't about to go back to Vostok Station to start drilling again. Nope. Too darned cold down there. Instead, they looked for quick and easy. Maybe it was a market timing program that had the good fortune to miss the disaster in 2008. Maybe it was something labeled "alternative" or "private"-something different that held out the allure of a better, warmer way.-a way without all that ice and cold wind.
Meanwhile, back in Vostok Station, those who remembered their lessons about patience and endurance are still bothered by the cold, but they have made pretty nice progress toward their goals. Since 2008, the equity markets, both domestic and international, have done quite nicely, despite blustery winds and frigid forecasts. The S&P 500 Index and the MSCI World Index have produced annualized returns exceeding 14% and 11%, respectively.
The message for investors is clear: Have patience. Be prepared for adversity. Don't give up when things get difficult. These are lessons that we have all learned at some time during our lives. Yet, when it comes to investing, we all too quickly forget these truths. Instead, we are frightened by the alarming forecasts of shock-and-awe journalists or we succumb to the siren song of skilled marketers.
Next time you think of running for cover in the face of adversity, think about the story of Lake Vostok. I'm not sure what we will learn from the microbes in that lake, but we have already learned a valuable lesson from the team of Russians who endured so much adversity to reach those pristine waters.
Scott A. MacKillop is President of Frontier Asset Management, LLC. Frontier manages portfolios for financial advisors and their clients. He can be reached at [email protected].