Dear Reader,
I still don’t know…
I truly hope you’re enjoying the warmer weather we’ve had and sincerely hope you’ve had a chance to get outside for the first time this spring and enjoy some fresh air. Will it be warm and sunny this weekend? I don’t know, but I do know that summer is around the corner.
Like the equity markets, the weather is near impossible to predict over the short-term. Despite the clear skies overhead, it still might rain. Despite the dark clouds rolling in, we still might get sunshine… I just never know.
What I can tell you is that summer will come soon, and we will get fall after that, followed by winter, and then spring again. Like the equity markets, the weather is much easier to predict over longer periods of time.
Has the stock market reached its bottom? Will it go up? Will it go back down? Will it go lower? Did I miss out on an opportunity? Did I cash out at the wrong time?
Betting on these unknowns over short periods of time can make you a big winner or a big loser; and through uncertain times, we will certainly hear from the big winners (“you should have”) and the big losers (“I should have”).
If you have some “play money” that is not ear-marked for retirement, your children’s education, a vacation property, sabbatical, new home, dream vacation and/or legacy, etc, then perhaps you might participate in this game of win-loss. My advice is don’t bet your long-term financial objectives on it.
For those important objectives, it helps to stretch out the time-horizon so their paths to reaching them become clearer; to step back and take a bird’s eye view – to refrain from being fearful, to refrain from being greedy. From there, ask yourself if you’ll be able to reach your goals.
I have included below the S&P 500 index (the index that measures the stock performance of 500 large companies listed on stock exchanges in the United States) as represented graphically and going back through various time horizons (1 month, 1 year, 5 years, and 40 years):
source: Google
Google and the Google logo are registered trademarks of Google LLC, used with permission.
Ask yourself: What is my time horizon? How long do I need my retirement income for? When will my children go to university? When do I require the means needed for my legacy?
The take-home here is to ensure you have a framework for long-term investing, and to ensure your emotions (excitement when markets are up, fear when markets are down) don’t cloud your judgment in sticking to that framework.
Any good financial and investment advisor has likely already articulated this framework to you, so if you’re already working with someone and need a refresh on your investing framework, revisit this with your advisor and spend some time understanding how your portfolio is positioned to ensure you’re on track to meet your long-term financial goals and objectives.
Know that if you have any questions about your financial plan, would like our opinion on what this current financial landscape means for long-term investors, or would like a refresh on the framework we have in place for times like these, please never hesitate to reach out.
We are available and accessible to you any time through email, phone or teleconference (video).
Be well and be safe,
Adam