My job as a financial adviser is to help people make good long-term decisions about how to deploy their investment capital for the future. In this endeavor all our facts are from the past and all our investment decisions will play out in the future about which no facts exist.
The future is always unknown, but it has never seemed more unknowable than it does at this moment. Howard Marks of Oaktree Capital recently wrote the confluence of four factors…
the shuttered economy
the oil price collapse
and the federal response to the crisis
… makes forecasting functionally impossible right now.
The operative word in that sentence is now. I agree wholeheartedly that forecasting is impossible now. I make only two observations around that fact.
Number one, in the face of the impossibility of forecasting right now we would all be wise to stop making or even listening to forecasts.
Number two, no one is investing for now.
Real people are investing for decades for their future and even generations. The last thing in the world a lifetime and even multi-generational investors should ever be thinking about is now.
My job as a financial adviser is to encourage people to get their heads out of now. With that out of the way, we can proceed to the practice of the financial advisors craft, which is quite simply rationality under uncertainty.
Given that we cannot predict, the question becomes how shall we plan. Planning is the way to avoid pitfalls. Ask yourself this question. Before the spaghetti hit the fan what were you investing for? What were your most cherished financial goals?
I’m guessing the answer will be centered around a dignified independent worry free retirement. Perhaps your grandkids or children’s education and your legacy. Well have those goals changed?
Of course they have not. Over these summer months I’m guessing. It will probably start to become clear that we’ve passed the trough of the economic contraction.
Yes, it was horrific and no I’m not forecasting a quick v-shaped recovery, but currently there is nearly 5 trillion dollars sitting in money market funds. And when people become a little more confident or just a little less petrified, they will start to realize that it is in the wrong place.
Keep your focus relentlessly on the plan. Think of your lifetime investment goals as a destination. You’re going from here to your destination in a car. The plan is how much you’ll have to invest for how long at what rate of return is the car’s chassis and body. The mix of stocks and bonds is the engine. It determines how far and how fast you can go. Behavior is the driver of the car and since I’m professionally responsible to keep the behavior headed safely in the right direction think of me as your driver.
Selection of which ETF or mutual fund we choose for instance instead of it’s equally random peers is the hood ornament. Please believe me when I assure you that the hood ornament doesn’t control anything.
Thank you for watching this video and know that we stand ready to serve you and those you love and help you achieve your most cherished financial goals.
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As an independent wealth management firm, we represent only the interests of our clients — not those of a corporation or bank. We are committed to guiding those we serve towards and through their retirement years in the smoothest, most comfortable way possible. Investment Advisory Services offered through Calandra Wealth Management, LLC a Georgia Investment Advisor.