Like most old proverbs, “In like a lion, out like a lamb” has a litany of origin theories and citations. By consensus, the saying has been accepted as a description for the weather during March. As March can be a transition month, it was believed that if it starts with harsh winter attributes (a fierce lion), it will end feeling like Spring (a docile lamb). There are many credited with coining the phrase but there’s no way of truly knowing who was first. All I know is that they didn’t live in Oregon, or it would have referred to June.
In a proverbial twist, financial markets came in like a lamb and went out like a lion in 2024. The first quarter was very strong despite a marked decline in expectations for Fed rate cuts in 2024. Eventually, markets gave way to these shifts, and we had a pullback (for most stocks) in the second quarter. Another rally in the third quarter ensued, this time much broader and aided by the first Fed rate cuts in three years. While the fourth quarter started out well and lasted through the Presidential election, stocks eventually gave way to a significant pullback and reconcentration (into mega-cap technology stocks) in December.
Not to say that things turned out poorly. Quite the opposite, in fact. 2024 was another year of double-digit returns from stocks, which always feels pretty “lamb-y” when we look back on it. But the year definitely ended on a far more volatile note than it started.
It certainly feels like the lion continues to roar in January. Between speculation about tariffs and immigration, questions about earnings growth, high valuations for stocks, and significant swings in interest rates, there has been plenty of ferocity already. Does that mean that the year will become more docile and go out like a lamb? Maybe.
More importantly, as long-term investors – especially in the current media-driven and speculation-rich environment – it is important to remember that lambs are usually only seen in the rearview mirror. Lions, however, are always present when looking ahead. Investing at its core is the practice of exchanging risks. Stock investors, for example, exchange the risk of inflation eroding the purchasing power of dollars for the systematic and company-specific risks of the equity markets. As we examine and weigh those risks, there are almost always more things that could go wrong than actually do. Even more frustrating, when something does go wrong, it’s usually not the thing anyone expects.
Thus, while we appreciate the time-driven balance that lions and lambs offer to the weather in March, they provide a perspective-driven analogy for investing. Looking ahead requires commitment, planning, and objectivity to face whatever lions may appear. Looking back, especially over long periods of time, offers the opportunity to reaffirm that commitment in a more docile mindset. Determining what you want to achieve, what risks you can and must take to do so, and having a trusted partner clarify forward and backward-looking perspectives.