“Active Patience” Pays Dividends

Spring thaw came very early for the capital markets, proving once again that sticking to your model and investment plan is the soundest advice during most market downturns. Our firm refers to this as “active patience,” meaning that you consciously do your best to remain calm and invested in your model while the news headlines swirl about.

Since World War II, the markets have recovered 100% of all declines, with recovery times averaging around 2 years, ranging between a few months to 4+ years. Patience wins. Baseball players who get a hit just 30% of the time produce a hitting average of .300, which qualifies for the Hall of Fame. Markets have recovered EVERY TIME. We just don’t know how long it takes to recover. But it doesn’t take decades. You actually have time for your accounts to recover from downturns, and patient investors are rewarded with the returns they need to maintain sustainable retirement income.

Another baseball analogy: Assume a 5- to 7-year market cycle is akin to a 162-game baseball season between late March and early October. If your team goes on a losing streak in June that drops them from first place to a few games back in second place, is the season lost? Do you expect your potential World Series team to win every game during the year? Of course not. Do you expect your accounts to always be up every day and every quarter? Sometimes they are down for a whole year (2018). But the focus is on the whole season, not just a handful of games. Our focus is managing your portfolio to last your lifetime, not just a year or two.

So, back to headlines. Seems lots of people are still worried about a potential recession affecting their portfolios. Once again, paying more attention to the headlines rather than sticking to an investment model has hurt those investors who made changes in late 4Q 2018. We don’t play “what if” games with your hard-earned investment capital. Headlines come and go. Patience wins.

Spring cleaning may not be fun, and some people find estate planning to be a similar task. But it’s essential to have your affairs in order. Has it been more than 10 years since your wills and trusts have been updated? Do you list a trust as a beneficiary of an IRA? Do you know why? If we haven’t reviewed your estate plan with you recently, please call us. We are not attorneys, but we help clients understand the implications of certain beneficiary choices, and we suggest getting highly qualified legal advice for your estate plan.

Contact us with any questions at 1-888-969-7500, [email protected] or via this form