Good morning & happy Monday!
“Both optimists and pessimists contribute to society. The optimist invents the aeroplane, the pessimist the parachute.”
– George Bernard Shaw, Irish playwright & critic, 1856-1950
How do you feel things have gone this last 12 months?
I don’t about you but I don’t think things FEEL any better today than they did a year ago. In the 2nd week of October last year the prime lending rate was 6.25%, today it’s 8.50%. The last 12 months have seen former President Donald Trump indicted 4 different times and have revealed that current President Joe Biden has likely been involved in ultra shady financial dealings with U.S. adversaries. Inflation is still way too high, bullets are still flying in Ukraine, and now we have bullets flying in the middle east! The Fed is still raising or threating to raise rates further, it costs a fortune to fill the gas tank, our politicians seem as corrupt as ever, the political divide seems as big as I’ve ever witnessed, we escaped a government shutdown by mere hours … yeah, things are not exactly going marvelously!
And yet, this Thursday (October 12th) marks the 1-year anniversary of an important occurrence in the stock market … the bottom of the current market cycle. The S&P 500 closed that day at a value of 3,577. By the end of September, the value was 4,288 … a 20% increase from the roughly one-year earlier (see attached chart).
Here it seems like the whole world is going to pot and the market was actually up 20%! How can this be? There seems to be a huge disconnect between Main Street and Wall Street.
This is almost always the case.
Things don’t have to be great for the market to advance, the market is always looking forward, where we as human beings are always looking at right now.
This is simply human nature to look at the RIGHT NOW … right now we see that August and September both brought negative returns and the market is very choppy … that does not at all FEEL good. But it is in times like these that we as investors must remind ourselves that we act on facts, data, and plans … not on feelings, speculation, or short-term headlines.
Feelings, speculation, and short-term headlines will all change. Today I feel bad, tomorrow I feel great. Today the pundits says ‘sell’, tomorrow they say ‘buy.’ The headlines change moment-by-moment. What is demanding our attention is ever changing. How could we possibly build a financial strategy on any of these? And yet, virtually every day we must fight these elements that try to sneak into our heads and blow up our financial plan.
My friends, this is where perspective is critical … this is where we come in. You have hired us to help navigate these choppy waters with you. It is not easy, most certainly not fun, but the destination is worth it! Hang in there, we are going to be all right!
I was on a plane recently and there was a crying baby and a pretty good amount of turbulence at one point during the flight. That was no fun at all! I’m looking out the window (at the wing that looks like a trampoline jumping up and down) trying to think about other things, but the plane just keeps bouncing around and the nearby baby just keeps screaming. I just wanted it to end, it was a very stressful situation.
It didn’t take too long before the flight smoothed out and the baby calmed down, but I know how hard it is to keep perspective during times of stress. I know all the statistics about how safe air travel is, but that offers little comfort when I FELT so unsafe. I think the most difficult part of that entire situation is how little control I had … I had none. I could not slow down the plane, alter the course, or do anything to change what was happening. I was simply a passenger and the plane was going where it was going whether I was on the plane or not, whether I liked it or not.
I fully understand that is likely how you are FEELING right now. A complete lack of control, significantly uncomfortable, and a feeling of just wanting it to stop. It is times like these that we investors must pause, catch our breath, and view things in perspective. I hope this email is helpful in that objective.
I am here to support you any way I can. If a conversation, meeting, phone call, or webinar would be helpful just reply to this email … I will gladly address any questions / concerns you may have.
Make it a great week ahead! 😊