Avalanche!

Avalanche!

Not just because they won over the weekend (and the Broncos did not), and not just because the snow is amazing in the high country. We have one word to summarize this year: avalanche!

More than 20 years ago, Stacey and I both wrote our masters theses on Chaos Theory. What we wrote about then is just as true today. We live in a chaotic world, with periods of order, and then surprising disorder. Think about this video. We all know that when we drop grains of sand on top of each other, eventually they will form a sandpile. What we don't know is exactly what shape it will take until it forms. It will be perfectly predictable randomness. We know that at some point in time too many grains will pile up and then... avalanche!

The same is true for the stock market. We know that if we invest for the long haul, we will likely accumulate large amounts of money. In the video, like grains of sand, our investments pile up. Some are outliers--to the right or left of the average. As long as we are diverse enough, we will accumulate a large pile.

Similarly, we know that occasionally our stocks will "avalanche." We never know when or how. In scientific experiments, they will control exactly the grains, the speed, the direction, the momentum, the location, and every other variable and, still, the grains will form a shape that is random on the periphery, consistently similar in the middle, and will avalanche at a completely unpredictable time.

So what are you thinking about these days? Are you worried about your stock portfolio? Are you looking at the outliers and thinking to yourself, "Oh my!" (or worse). Let's talk. Call us and let's make sure the preponderance of scientific evidence is working in your favor to deliver you the financial rewards you need to last the duration of your life, to provide you the independence and dignity you deserve.

Let's make sure you really understand what is driving the performance of your portfolio and, perhaps equally important, what is a dangerous distraction. Call us!

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