Greetings! I can't believe there's only FIFTY days left in this year... Fifty days left in the decade, actually. Wow.
I have some things I'd like to share with you this week: some thoughts on progress, a Buddhist Parable, and some comments around investment returns and politics.
Adam Harding, CFP / Smartvestor Pro
If this is your first time receiving this email, here's some background: "Three Things" is a quick weekly email to recap some things that stood out to me in the previous week. I try to find inspiration in articles, videos, images, and anything else that I can tie into a financial planning or investment tip. Let me know if there's something you'd like to see covered, or if you happen to spot something interesting which you'd like to share. I hope you find this insightful!
Progress usually doesn't feel like progress.
Our winter grass just grew in.
- 3 Weeks ago the backyard was mostly dead grass and mud.
- 2 weeks ago there were seeds laid down, no sprouts.
- 1 week ago there were a couple tiny sprouts, but not much.
- This morning we have thick green grass.
It was hard to see the day-to-day difference, but clearly it was there.
I'm noticing the same thing with my son, Clayton...Today he's 12 weeks old and changing so much.
Here he is, practicing the face he'll use when he wants to ask dad if he can tap into his Roth IRA to pay for Fortnite toys or something... "Sorry buddy. No Roth IRAs for toys... We're on a 60+ year accumulation plan"
(we'll tap into the piggy bank for toys)
It's crazy how quickly time passes --I'm sure you can all agree.
In short, progress is like compounding; small consistent actions equal big eventual outcomes:
When it comes to making investment decisions I'm always a proponent of setting goals and investing with purpose....But here is your homework:
All of us are very good at measuring the distance between where we are and where we want to be. Sometimes it's worth pausing and noting the difference between where we wereand how far we've come.
Take a moment to pat yourself on the back.
Somehow, in the midst of my regular readings, I stumbled on a Buddhist Parable: Kisa Gotami.
Here's the story:
Kisa Gotami had lost her only child and, in her sorrow, she was directed to see the Buddha.
The Buddha told her she could bring the child back to life if she were able to track down white mustard seeds from a family where no one had had died.
Kisa went from house to house, but no one had the mustard seeds because everyone had experienced loss.
She realized that there are no white mustard seeds to serve as a cure for mortality... But acknowledging this mortality is a key part of healing after loss.
I say it all the time: Financial planning is life planning... This parable helped me remember a common bond between us all.
Extra Credit: Book: Being Mortal by Atul Gawande (Link)
Be Sure to Check Your Fund Manager's Politics
Barron's Article: Link
Thanksgiving is on the horizon...
Fighting With Your Relatives About Politics....
Tis' the season.
One thing on everyone's mind:
How might political outcomes affect financial markets?
Let me ease your fears and arm you with some data to help put Cousin Eddie in his place.
First, even the pros make predictions --and they're almost never right.
Paul Tudor Jones told an investment conference that a poll at his firm predicted a Warren presidency would send the S&P 500 down to 2250, (about a 27% decline from current levels). The poll expected a 12.5% decline if either of two more moderate Democrats, former Vice President Joe Biden or South Bend, Ind., Mayor Pete Buttigieg, were to win. President Donald Trump’s reelection next year would send the S&P to 3600, a 19% gain, according to his firm’s poll.
It's worth remembering that Ray Dalio, who runs the largest hedge fund in the world, predicted a 20% decline if Trump were to win in 2016. Clearly that bet would not have been a good one.
Despite the consistent failure of predictive investment management, people still try to find any reason to forecast what's going to happen.
The thing is, history shows no preference for Republicans or Democrats.
Simply put, the person sitting in the White House does not matter as much as the people sitting in your house.
Neither elephants nor donkeys historically favor bulls or bears..And investors’ overall market outlook shouldn’t be influenced by political preferences. Unfortunately, politics incite emotion (both euphoria AND fear), and emotions should be carefully managed.
After all, Bush (2000-2008) didn't cause the tech bubble, the attacks on 9/11/2001, and the formation of the housing bubble. Those market-moving events had nothing to do with policy.
How to Deal With Political Uncertainty Within Your Portfolio:
- Build a strategy using the weighty evidence of history.
- Understand that Uncertainty = Reality.
- Turn off the news if you have to.
That’s all for now, have great week!
Adam Harding, CFP®
Three Things: Progress, Parables, and Politics (November 11, 2019)
November 11, 2019