It’s amazing to me how short of a memory some people seem to have. It was just a little over a year ago when the market had one of the quickest and most severe drops of all time. At the height of the carnage, my portfolio was down by over a third from recent highs. However, for those who have a long term investing mindset, March of 2020 proved to be an amazing time to have bought shares of some of those high quality companies that had been beaten down. And even if you didn’t have dry powder to deploy, simply not panicking and holding onto your shares instead of selling them proved to be a very lucrative strategy.

Right now, my portfolio is again down by over a third from recent highs. There are a lot of differences from 2020, though. There is no clear catalyst for this drop, no pandemic starting to ravage the world and no lockdowns threatening so many businesses. The drop this time around also seems to be far more concentrated in “growth” stocks while the broader market seems to be largely unaffected. We’re also seeing many companies drop big in the aftermath of earnings that weren’t just good, but oftentimes incredible.

But perhaps the biggest difference to me is when you zoom out and look at some of the performances over the past 18 months. Here are some of my largest positions in my portfolio. All of these are down by at least 25% or more over the past few months. Some are down a lot more. But take a look at what happens when you zoom out just a little bit and look at their performance over the past 18 months (even counting the recent drops):

• Shopify (SHOP) +240%
• Mercado Libre (MELI) +180%
• Sea (SE) +640%
• Tesla (TSLA) +900%
• Square (SQ) +245%
• Teladoc (TDOC) +80%
• Redfin (RDFN) +200%

Many of these companies have had absolutely incredible and unsustainable runs recently. It is not at all surprising to see them have a bit of a pullback. Volatility is the price of admission for superior returns. In order to outperform the market over the long term, you need to be able to tolerate times like these and keep a level head. Yes, seeing all this red day after day can be unsettling, but I am no more deterred to deviate from my investing strategy now than I was in March of 2020 or the fourth quarter of 2018. I remain fully invested, and the majority of my portfolio remains unchanged from the beginning of the year. Last quarter was a bad quarter. This quarter is shaping up like a bad quarter. All of 2021 could be a bad year, but I remain confident that by staying the course and investing for the long term, that 5+ years down the line I will be very happy with my decisions today.

Don’t panic.