So goes the opening stanza of Rudyard Kipling’s inspirational poem, If.

Kipling’s point was that sometimes you have to do the right thing even if it is difficult and despite the fact that everybody else is doing something different.

In times of economic volatility markets “lose their heads” and react irrationally. A good example of this is what many investors have been doing with their money over the last couple of months. Back in February the US 10 Year Treasury Bond yield was around 3.75% per annum. Six months later the USA lost its coveted AAA status having been downgraded by Standard & Poors to AA+. The reason for this was analyst concern that USA might not be able to repay the 15 trillion dollars it has borrowed.  A downgrade like this should normally mean that 10 year Treasury bond yields rise to compensate investors for the greater risk they are taking. But the current yield is 2.25%, a full 1.5% lower than it was in February.  So what is the reason behind this seemingly illogical position? The answer is investor fear due to the current crisis. Some investors have lost their heads and are buying US bonds even though the yield is a paltry 2.25% and there is an increased risk of default.  This isn’t logical and its an example of the irrational behaviour that market fear can cause. There are plenty of other examples to choose from including the disparity between the price of gold mining shares and the price of gold. Over the last 6 months we have seen the price of gold soar by nearly 18% and yet over the same time period the price of shares in gold mining companies have fallen by 25%. How can this be? If we assume that there is a relatively fixed cost in getting the gold out of the ground then you would expect the price of gold mining shares to more or less track the gold price, since this is the factor that will have the greatest bearing on profitability. The answer yet again is the irrationality brought about by fear.

In every crisis there are opportunities to buy good investments at reasonable prices and when sentiment turns, those opportunities should bear fruit. All that is needed is the will to "hold on" and use the time to "fill the unforgiving minute with sixty seconds worth of distance run".