Month: September 2018

Back to the Future

© Can Stock Photo / johnsfon

There are many stories about people who travel back in time, where they might make a huge impact on the future through some very small action taken there. The 1985 film Back to the Future is one example among many.

Our friend and mentor Burt White poses an interesting question about this popular plot. We understand the concept that small things in the past could have changed the present dramatically. But do we fail to anticipate how small things in the present could dramatically change the future?

• What if you told that person you loved them?
• What if you showed an interest and provided encouragement to another?
• What if you made a minor improvement in your daily health habits?
• What if you made better personal connections with a colleague?
• What if you balanced your enjoyment of the moment with good long-range planning?

White’s theory is that we underestimate the power of our influence on others—or don’t even think about it. Sometimes a small thing may have a large impact. If we are mindful of that, our words and deeds might better reflect a more worthwhile and positive approach to life. Wouldn’t we each be happier if this were the case?

If your life were that movie, and your future self was going to come back and change some little thing about you today in order to totally transform the future…what would it be?

This essay began with the idea of time travel. The fact is, we all ARE traveling through time. We are going to the future, minute by minute and day by day. One of our roles is to try to make the best things possible for you, to help you shape your future intentionally. Time travel is exciting!

Clients, if you would like to talk about this or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

Is a Drop a Loss?

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We humans use stories about events great and small to help understand the world. One of the common stories about the stock market contributes to a great misunderstanding, however.

A market decline from some higher point in the past is often spoken of as a loss. Yet whenever the market is trading at an all-time high, every past downturn has been fully recovered. One might ask where the loss actually is.

To illustrate, the decade of the 1990’s was a good one for the broad stock market, as measured by the S&P 500 Stock Index. It more than tripled, rising from 353 points to 1,469. Yet of the 2,527 trading days of the decade, 1,171 saw a decline—a drop—in the market index.1

Those down days represent a cumulative 729% in “losses.”1

In a decade when the market tripled, how does it make sense to speak of losses during the interim? Particularly losses equal to many times the beginning level?

The market is volatile. Values fluctuate. It goes up and down. But if you have long term goals, it might pay to focus on long term results, not temporary downturns. If you invest next week’s grocery money in the stock market, then yes, a temporary downturn will result in a loss when you sell out in order to buy food. Otherwise, we would say a drop is not a loss.

Note: one should never invest next week’s grocery money in the stock market.

Our business is striving for long term results for people who share our time horizon and philosophy of investing. We talk about it every way we know how, in many venues, to reinforce effective investing attitudes and to forewarn those who lack them.

Clients, if you would like to talk about this or anything else, please email us or call.

1Standard & Poor’s 500 Index, S&P Dow Jones Indices. Retrieved September 18th, 2018.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Stock investing involves risk including loss of principal.

 

The Right Stuff

© Can Stock Photo / LiaKoltyrina

Tom Wolfe’s 1979 book chronicled the elite test pilots from whose ranks the first astronauts were chosen. The title The Right Stuff referred to the combination of mental and physical characteristics required for their work.

According to author Charles Duhigg, the same words apply to people who have reached high levels of effectiveness in business. People who become much more productive do not necessarily get more done—they get the right stuff done. Thinking deeply about the work enables them to focus on the most important elements.

At 228 Main Street, we began focusing a long time ago on our three most important activities. Talking with you to collaborate on your plans and planning is at the heart of our work. Investment research and portfolio management are the other most valuable activities. These are the things that make the most difference—they are the right stuff for us.

We figured out that we needed to develop a staff to take care of the important details of service. Having the right beneficiaries, getting money out to you when needed, preparing the forms and maintaining the files we need simply to be in business—all of these things are vitally important, too.

There are about 10,000 minutes in a week. By focusing our work time on the right stuff, we have a better chance to understand what the right stuff is for you—your most important objectives, your most cherished goals—and help you strive to reach them.

Clients, if you want to talk about your ‘right stuff,’ please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Passion and Indifference

© Can Stock Photo / Vicheslav0

“Indifference is as important as passion.” Organizational expert and author Robert Sutton (no, not THAT Bob Sutton) included this on his list of 15 things he believes—his core principles.

In recent years, seeing the occasional life and death struggle up close, juggling time constraints and geographical complications, most of the non-essentials have been stripped from life. Time and energy must be focused on the things that really matter.

Health and family are at the top of the list. But business provides the resources for the necessities of health and the niceties that keep life worth living. So 228 Main is really integral to everything else. It is fair to say I am passionate about my work for you.

What makes room for our passions, our priorities, is indifference to many other things. If it has a spark plug in it, chances are good that I am indifferent to it. If it is on television, ditto. Worrying about my appearance? That would have to rise a thousand places to get on the bottom of my list. Yardwork, fine wine, dust, arguing with strangers on the internet, complaining about things beyond my control…we do not have enough space to list the things to which I am indifferent.

Connecting with you, time with family and those I love, attending to health, the economy and markets, striving to grow your buckets, building an effective organization, these are the things that matter to me now. It is an interrelated, integrated life.

We all have interests, preferences, and our own ways to regenerate. But we can’t focus on our passions unless we let go of a lot of things that really don’t make much difference. Wise clients, mastering the art of contented retirement, made this point to me recently. Many things that seemed important enough to worry about years ago don’t even appear on their radar anymore—indifference is the word.

Clients, if you would like to talk about your passions or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Don’t Look Down

© Can Stock Photo / edan

Many of you may remember the classic Warner Brothers roadrunner cartoons. Wile E. Coyote continually schemes to catch the roadrunner only for his plans to backfire. Often he winds up sailing haplessly over the edge of a cliff, hovering in midair. Only once his predicament finally dawns on him does he plummet to the canyon floor below.

Sometimes he falls almost immediately. Other times he may remain hanging in the air, oblivious, for an extended time before gravity kicks in. You know as soon as he goes off the cliff that he is in for a fall. You can probably even figure out what will happen as soon as he puts his plan together. But sometimes his physics-defying act winds up dragging things out.

The market, much like the cartoon coyote, does not obey the laws of physics. Sometimes it seems obvious that something may be due for a big market move. A company may seem like it is absolutely set to take off, or due for a fall. But no matter how obvious it seems that a price is unsustainably high (or low), the market can stubbornly defy gravity for a long time before reality finally sets in.

Sometimes a prediction may pan out quickly. Sometimes they may pan out later, or not at all. We have enough experience to come to terms with this and take the long view. We do not believe in trying to time the market: we cannot claim to know what will happen in the market, and we certainly cannot claim to know exactly when.

We think we may be able to make a pretty good guess about what will happen—eventually. But we would rather stick to our core investment principles than try to predict the immediate actions of a market that sometimes seems to have more in common with slapstick cartoons than the real world.

Clients, if you have any questions or concerns, please email or give us a call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Pain Fades Away

© Can Stock Photo / pressmaster

Some pundits calculate the current run-up in the stock market as the longest bull market in history. It seems many have forgotten how tumultuous and uncertain things have felt at times during the rise.

Before the rise began, a punishing drop in the market (and investment account balances) happened, from mid-2007 to spring 2009.

Then, just a couple years into the recovery, we had one of the most turbulent periods ever. In August 2011, after dropping more than 5% the week before, the Dow Jones Average dropped another 5% on Monday, August 8. This 634-point drop was partially offset by a sharp rebound on Tuesday, a 429-point gain. Wednesday reversed again, with a drop of 519 points. Thursday’s gain of 423 points ended a string of daily moves greater than 400 points, down-up-down-up.1

Since the market was much lower then, an equivalent 4% move today would be about 1,000 Dow points! Imagine that four days in a row. We lived through it.

Why did this happen? Developments developed, happenings happened, and pundits spewed punditry. It would spoil our story to detail the details. As it turns out, they don’t matter.

We’ve been asking people whether they remember this episode. Few do. Thus our conclusion: the pain is temporary.

If you do a little math with our story, you’ll note the Dow dropped more than 10% in six days1. This was alarming to those who were paying close attention. Yet from the longer-term perspective, it probably would have been a mistake to sell at any point in there.

After all, this turmoil happened during the longest bull market in history!

The next round of turmoil is always out there. When we counsel patience, it is with the long term—and a knowledge of history—in mind. Clients, if you would like to talk about this or anything else, please email us or call.

Notes & References

1Standard & Poor’s 500 index, S&P Dow Jones Indices: https://us.spindices.com/indices/equity/sp-500. Accessed September 4th, 2018.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.