Dear First Mates,
Hello everyone! I hope you all 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.
Takeaway #1: The Futility of Market Timing
The last several months have reinforced my belief of how fruitless it is to try to forecast & time markets.
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 both 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%. Very humbling, indeed. The truth is that short to intermediate term outcomes are not merely unknown, but unknowable. Stand on that incontrovertible fact.
“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
Takeaway #2: Emotional Preparedness
While I hope we see smooth sails from here, I want to prepare everyone that another major drawdown is quite possible. I’m not certain we have seen all the tentacles of this beast just yet. So…be prepared! And take comfort in knowing two things: I will be here as your loyal captain no matter whatever comes and that 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 entire pandemic, we are contrarians who deploy our cash (“dry powder”) when the market is offering 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 to not 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. I have made a great new resource called the 2020 Planning checklist for us to cover in review meetings. Let’s aim to complete at least two items on the checklist that are important to you. I am always here if you need me. You can book a review meeting here. Get ready for my next episode of “What’s Up At The WealthPlan” that should be hitting your inbox in the coming weeks. Have a fantastic summer! 2020 Planning Checklist
With gratitude, David Warshaw, CFP®