“We live on an island surrounded by a sea of ignorance. As our island of knowledge grows, so does the shore of our ignorance.” – John Wheeler
Dear First Mates,
Hello everyone! I hope you all are doing well and in good cheer. I am looking forward to the summer—however odd it may be. The last few months have been illuminating, to say the least, and I’d like to share three takeaways.
Insight #1: Timing the markets is a futile and worthless exercise.
The last several months have reinforced my belief that forecasting and timing markets are fruitless. Let’s go back to February 19th, when this happened to the market (as measured by the S&P 500 Total Return Index).
The market declined around 34% until March 23rd. People were stunned and scared—and for good reason. But then the unexpected happened.
As of June 12th, the market saw a stunning recovery of around 25%. This is very humbling, indeed. The truth is that short—to intermediate-term outcomes are not merely unknown but unknowable. Stand on that incontrovertible fact.
Takeaway #2: Emotional Preparedness
While I hope we see smooth sailing from here, I want to prepare everyone so that another major drawdown is quite possible. I’m not certain we have seen this beast’s tentacles just yet. So…be prepared! And take comfort in knowing two things: I will be here as your loyal captain no matter what comes, and it will likely be another blip on an ever-rising chart. Remember to utter these words when faced with investment despair – This too shall pass!
For passengers sailing aboard The WealthPlan LLC, you understand that we hold our current investments irrespective of current market noise and continually add to them. As I wrote during the pandemic, we are contrarians who deploy our cash (“dry powder”) when the market offers a generous sale. The hallmark of long-term, goal-focused, planning-driven portfolios is the practice of rationality under uncertainty. After all, we cannot know which way the equity market’s next 25% move will go, but we know with crystal clarity which way its next 100% move will be. Let’s encourage our friends and family not to risk missing it.
Takeaway #3: Update Your Plan
This is a great time to update your financial plan with me using your eMoney client portal. Remember – your investment portfolio serves your plan. And your plan should be a reflection of your most cherished goals. Prepare for my next episode of “What’s Up At The WealthPlan,” which should be in your inbox in the coming weeks. Have a fantastic summer!
Dave’s Picks
Justin Timberlake – Summer Love (Lyrics)
The Pussycat Dolls – Buttons – Choreography by Jojo Gomez | #TMillyTV
Freakonomics by Steven D. Levitt & Stephen J. Dubner