Turning to the Forgotten André Kostolany for Guidance
In recent weeks, the stock markets have been shaken to their core, and many ETF investors – the so-called “hammock investors” – have faced sharply falling prices for the first time, along with spectacular recoveries like the one on the evening of Wednesday, April 9. This has resulted in volatility rarely seen before. Similar market swings were last observed when the pandemic hit in March 2020. Over the past months and years, many investors were lulled into a false sense of security, assuming that markets would always trend upward. But corrections and volatile movements are simply part of the stock market. The key now is to keep a cool head – no matter how erratically and unpredictably the current U.S. leaders behave – and, most importantly, not to stop investing. In fact, gradually buying more might be the best approach.
Market Declines Are Real and Happen Fast
Many ETF investors are now looking at their portfolios and wondering where a chunk of their value has gone. Those who weren’t invested during the start of the COVID lockdown – when markets lost tens of percent within weeks – or who are too young to remember the Great Financial Crisis of 2008 – when the banking sector nearly collapsed – may never have realized that markets can indeed fall sharply. Until just a few weeks ago, for them, this idea was purely theoretical, something they read in textbooks or heard secondhand.
A lot of new, young investors believed markets always (gradually) rise. And when looking at the major index charts since COVID – with the exception of the first half of 2022 – that assumption seemed valid. Thanks to the popularity of passive investing through ETFs and the FIRE (Financial Independence, Retire Early) movement, many young people only recently started investing and have never known otherwise. That’s why these market drops are now being met with wide eyes. But Wall Street has a well-known saying: “A bull walks up the stairs while a bear jumps out the window.” In other words, markets rise slowly, but fall quickly and violently. Experiencing such a crash is, in the end, a good thing: it teaches investors that markets are inherently volatile and shows them how to behave when it happens again.
Look Back to André Kostolany
In difficult market times, it helps to revisit the wisdom of past market thinkers with experience across many crashes. One such figure is the now largely forgotten André Kostolany (who passed away in 1999). He may not be widely known anymore – perhaps because he published only in German and French – but don’t underestimate him. This Hungarian-born market philosopher combined a deep understanding of psychology and market mechanics and had a unique way of explaining financial concepts with vivid metaphors.
His writings stood out particularly when it came to handling market crashes. “Investing is a marathon, not a sprint,” was one of his sayings. During downturns, he ignored short-term noise and focused on long-term trends. He likened markets to spoiled children: unpredictable and emotional, but growing wiser over time. Kostolany believed that volatility had less to do with numbers and more with human emotion. Though the market is always “right,” it is rarely rational. While others sold in panic, he saw opportunities. He also advocated for holding cash reserves to deploy during extreme pessimism: “A good investor is like a hunter with a loaded gun,” he’d say. “In a sell-off, liquidity becomes power.” Another favorite mantra: “Buy when there’s blood in the streets – even if it’s your own.”
He had much more to say. If you want to learn more about his perspective, read his masterpiece The Art of Investing, or explore his long list of quotes. Kostolany loved dishing
out one-liners, often with the intention of helping investors avoid common mistakes. Here are a few gems:
- “Those who don’t own stocks when prices fall, won’t own them when they skyrocket.” If you wait too long on the sidelines for the perfect moment to invest, you’ll miss the boat entirely.
- “A man can choose many ways to lose his fortune: the quickest is at the casino, the most fun is with beautiful women, and the dumbest is in the stock market.” This one speaks for itself.
- “A good speculator must be sharp, intuitive, and imaginative. After every win or loss, he must reflect on what caused the outcome. And even after success, he must stay humble.” Stay grounded and keep learning. Luck always plays a role.
- “I can’t tell you how to get rich quickly, but I can tell you how to get poor quickly: by trying to get rich quickly.” Patience is key.
- “I like the stock market because there’s nowhere else on earth where you can find so many fools per square meter.” Many think they know everything, but they don’t – and therein lies opportunity.
- “The best thing an aspiring investor can do is study mass psychology. The best book on the subject is The Crowd: A Study of the Popular Mind by Gustave Le Bon (1895).” The crowd’s behavior is the key force in markets – something no economist or computer can predict.
- “If I had kids, the first should become a musician, the second a painter or sculptor, the third a writer or at least a journalist, but the fourth should be a stock market speculator to support the other three.” The ability to forecast can yield millions.
Practical Takeaways
When you piece his wisdom together, the message is clear: keep a cool head, don’t be misled by short-term news – no matter how absurd (like tit-for-tat tariff disputes) – and stay invested with a long-term perspective. It’s easy to say “stay calm” when your portfolio is in the red and daily political noise adds to the stress. But in practice, many investors have stayed composed in recent weeks and even used the downturn to increase their positions. Without realizing it, they followed Kostolany’s advice. They assumed the soup is never eaten as hot as it’s served. The sharp rebound on April 9 and 10, when Trump paused his tariff plans, validated their stance – even though the volatility and uncertainty haven’t disappeared.
So practically speaking, don’t panic sell or reduce your ETF holdings on bad days. Emotional decisions often lead to poor results. Instead, stay focused on your long-term goals. Keep investing and consider buying more on sharply negative trading days – and yes, there will be more. Maintain your savings plan and continue investing on the same day each month. The benefit now is that your money buys more ETF units than before, lowering your average purchase price over time – something that pays off long-term. You can also inject extra money on especially red days, so make sure you keep some cash handy.
Also, ensure your portfolio is well-diversified. Don’t put everything into a single ETF like the MSCI World, which is heavily weighted toward the U.S. Stay informed about market developments and trends – knowledge helps you better handle volatility. That said, let’s also be cautious: don’t go all-in just yet. The volatility is far from over. Trump’s unpredictability will likely continue for a while, and the markets – read: investors – need time to digest what’s happened in recent weeks.
