The Disease of Kings And King of Diseases

The disease of the kings and the king of diseases dates back to Egypt, 2,600 BC. In 1963, Thomas Sydenham, an English Physician described its occurrences so very accurately.

Those who fall ill to the disease are either old men, or men who have worn themselves out in youth as to have brought on premature old age—of such dissolute habits none being more common than the premature and excessive indulgence in venery and the like exhausting passions. The victim goes to bed and sleeps in good health. About two o’clock in the morning he is awakened by a severe pain in the great toe; more rarely in the heel, ankle, or instep. The pain is like that of a dislocation and yet parts feel as if cold water were poured over them. Then follows chills and shivers and a little fever… The night is passed in torture, sleeplessness, turning the part affected and perpetual change of posture; the tossing about of body being as incessant as the pain of the tortured joint and being worse as the fit comes on.

Today, the disease is more commonly known as gout – the term dating back to around 1200 AD, and is typically a combination of diet and genetic factors. There are certain things that make it worse, and others that make it better.

Last week I fell ill to the disease of kings, and boy, it certainly earns its name – king of diseases. If you’ve never experienced the pain, the torture this illness brings, ask someone who has and they will describe pain of dislocation, and fractured bone. Whatever you do to try and alleviate the pain, it’s merely temporary. The disease needs to be treated before it hits.

Like the disease of kings, investing too cannot be left untreated – one can simply not look for immediate relief when one has not made the right decisions for years prior.

Here are three key principles to apply when investing for the long-term that will ensure you’re not looking for the pain killers when things go south:

Start investing early

Unlike most things in life, you can start investing as early as you like. The chart below shows the impact starting early has on the end balance of your portfolio. It shows four investors each saving/investing $5,000 annually. Just take a look at Consistent Chloe’s portfolio, and compare it to that of Late Lyla – it’s almost half the value only having started 10 years later!

Source: JP Morgan

The power of compounding

Whether Einstein called it the eighth wonder of the world or not, it matters not. What matters is how powerful such a small decision can be. The chart below shows the difference between reinvesting dividends and distributions and without – almost four times the amount!

Source: JP Morgan

Stay invested

By trying to time the ups and downs of the market, history shows time and time again you’re going to lose money.

The chart below shows us the return of an investor who remained fully invested in the Australian stock market from 1996 through to 2017 – they earned 9% pa. If they had missed just the 10 best days during that time, their return fell to 6.50% pa. If they missed the 20 best days during that time, they return was halved – 4.60% pa, and so on.

Source: JP Morgan

Looking for short cuts and get rich quick schemes in the midst of great pain is like taking pills at the peak of illness expecting it to solve all your problems. I just ain’t gonna happen.

Sources: JP Morgan, Wikipedia, Gout – The Affliction of Kings