Investing—It’s NOT Different This Time

So, 2023 had a BUNCH of volatility in the market. As a result, I heard rumbles from some of the families that we work with:

•  Are our investments safe?
•  Is the market going down?
• What should we do

While I can’t guarantee anything, my answers to these 3 questions are ALWAYS the same:

• I feel investments are safe as the world is growing, as is the world economy.
• Yes, I believe the market will go down—and by a lot. I just don’t know when and by how much. However, I feel investments are safe as the world is growing, as is the world economy.
• We should stick with our Investment Policy Strategy (IPS) as I feel investments are safe as the world is growing, as is the world economy.

Yes, the repetition above is intentional:

• We must CONSTANTLY be reminded to stay the course with our IPS, as market volatility is uncomfortable and causes us to question our course of action.

Nick Murray To The Rescue

When it comes to investing and investor behavior, I’m a disciple of Nick Murray. Murray’s been at this for decades and has dealt with the challenges of human emotions and human tendencies to do EXACTLY the wrong thing at the wrong time.

He offers incredible insights as to what people are feeling and what we— as advisors—might be able to share with them to protect them from themselves. Enter DALBAR. From their website:

• DALBAR, Inc. is the financial community's leading independent expert for evaluating, auditing, and rating business practices, customer performance, product quality and service. Launched in 1976, DALBAR has earned recognition for consistent and unbiased evaluations of investment companies, registered investment advisers, insurance companies, broker/dealers, retirement plan providers, and financial professionals.

Dalbar is known for their Quantitative Analysis of Investor Behavior (QAIB). The QAIB consistently indicates that over 20-periods, investors underperform market indices by about forty percent.

READ THAT AGAIN:

Investors Underperform By About Forty Percent Over Time.

Folks, the market is efficient. We as humans are not. Well, not totally true— we are very efficient at being IN-EFFICIENT at investing when left to our own devices!

So What’s The Answer?

You can sum it up pretty well with these two “generic” statements that apply in just about every area of life:

• Plan the work.
• Work the plan.

Successful investors have a plan and stick to it. I’d challenge anyone reading this to answer two questions:

• Do I have a plan that is well thought out and based on facts and data?
• Do I have the discipline to execute that plan?

If your answer to both questions above is “yes,” congratulations! You’re amongst the minority of investors, and I believe you are going to be incredibly pleased over the long term with the performance of your portfolio.

Conversely, if your answer to either of the above is “no,” I would encourage you to reach out to others for help—could be friends, could be family, could be a professional. But you need to reach out, as these two questions are bellwether indicators of investor success.

Side note, while I’m writing this section regarding investing, the same framework is applicable to any area in which you want to grow personally, professionally, or spiritually. Having a solid plan and working the plan is a pretty good recipe for success. Having a guide/coach alongside you during the process increases the probability of success.

 

Would You Like More Support?

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• Do you have a well-defined Investment Policy Strategy that is used to drive your investments in support of a comprehensive financial plan?

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• If not, would you like to partner with someone who is used to helping people get through these struggles and (then, with confidence) implement portfolio strategies in a systematic manner while focusing on your desired outcomes?

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If so, feel free to send us an email or give us a call. We’d love to have the opportunity to help you find a bit more peace of mind when it comes to investing.