Read this Periscope for a timely reminder of our timeless beliefs. E-mail readers get a link to the complete quarterly investment commentary.
Last week, I discussed three crazy-bad “investment” ideas: Silly. Really.
I do not believe we should place our hard-earned money in those places. This week, let’s discuss what we should do, and what we are doing about this upcoming election.
Let’s revisit a handful of timeless truths:
- None of us know what the future will bring.
- We all invest with history as our guide.
- We know that past performance is not indicative of future performance.
And, we’re constantly bombarded with reasons to stray from our own real-life, long-term financial plans. Sometimes, these distractions are compelling. We want to act on them. This is our raison d’etre: call us when the news is bad. We’ll make sure you take the right action.
Read more about our six investment beliefs.
I Cannot Keep Myself Safe!
The 2020 election is our next big challenge. We cannot control the outcome of the election, at least not individually. We may believe that if the other side wins, bad things will happen. This can lead to a sense of helplessness—”I cannot control the election” may become “I cannot keep myself safe!”
When we are threatened, we normally want to take action. We want to get out. We want to freeze, fight or take flight. Often, these instincts can lead to a poor financial decision. Where can we find shelter? We use our timeless truths to guide our decisions.
Portfolios Built for a Changing World
We built our portfolios to diversify and balance the wide range of risks and return opportunities in the world today. Overall, we are very comfortable with how our portfolios are positioned. Nothing in our assessment indicates a shift in positioning would improve the risk/return balance.
History shows markets are consistently unpredictable. Adding to the uncertainty are the unprecedented circumstances, challenges, and structural changes the global economy is currently facing.
A high degree of conviction in any single outcome is imprudent. We do not know if this or that candidate will win. We do not even know what will happen if they do win. We will not know the effects of this or that policy shift for many years.
Instead of trying to predict the future, we built resilient portfolios across multiple plausible scenarios. We plan for a range of shorter-term risks. We take action with a longer-term perspective.
Let’s be honest, no investment in equities will ever mitigate short-term risks without sacrificing long-term potential returns. This is a timeless, if not unfortunate, truth. So we keep our primary focus on the medium- to longer-term fundamentals that ultimately drive investment returns.
Timeliness in 2020
In March 2020, we had confidence that the market would recover. For clients in our usual portfolios, we rebalanced into equities. I give us a good grade on that decision. We won’t hesitate to take advantage of compelling opportunities when they arise.
Investing in this way requires discipline, patience, and a willingness to stand away from the herd at times. It can feel uncomfortable to stay the course, or add to equities, when markets are plunging or to care about valuation and not chase markets higher when they are soaring. In the end, this is the best approach we’ve found to achieving one’s long-term investment goals.
Hang in there. Vote. Be thankful. Put the investment and financial stressors on our shoulders. We endeavor to continue to earn your trust each and every day.