View from the Chair: Windermere’s Market Perspectives (April 2019)

April 9, 2019

A recent blog post from Seth Godin entitled “More Right” follows:

There are at least seven realistic ways to get from my home near New York to a meeting in Washington DC. None of them are wrong. Each offers its own advantage in terms of resilience, speed, cost or hassle.

And so, we can’t choose based on this is right and those are wrong. The only useful construct is to consider our priorities and find the route with the best combination of trade offs.

Waiting for perfect is a never-ending game.

And the comfort of totally right vs. totally wrong is elusive

When reading this, I was instantly struct by how many investing lessons can be drawn from this paragraph – especially when considered in context of the past six months. Here are a few key things to consider:

1.) Forget right and wrong: When it comes to investing, everyone has an opinion.  And in times of volatility (namely to the downside), those opinions become louder and more authoritative and the pronouncements of what is right and what is wrong intensifies.   And while we all know that no one can be 100% sure what will happen next, oftentimes the conviction of the talking head or article writer can still be very persuasive. There is no universal “perfect answer” when it comes investing. What is appropriate for your circumstance may not be even close to appropriate for someone else. Stay in your lane and know your truth. The rest? It’s truly just noise

2.) Evaluate priorities – So how can you determine what is right for you? Evaluate your priorities. Without giving careful consideration to what it is you are attempting to do with your wealth, it’s impossible to know how to move forward. So give it some thought. What are your plans in the future – 1, 3, 5, 10 years (or more) from now? What does life look like once you stop having an income stream from employment? What are your goals (if any) as it relates to family gifting or charity? What other income sources do you have? When do you anticipate pulling money from your invested assets? What matters most to you and your family? Spending some time addressing these questions should bear out the items that are of the most importance to you

3.) Consider trade offs – Unfortunately, nothing in life comes without trade offs and management of your wealth is no exception. Once you have outlined your priorities, consider what the trade offs look like. For instance, if your priorities require considerably more wealth than you have, you may be facing a trade-off of lower spending, higher saving, or higher required rate of return (leading to more volatility). Or if your priorities involve a certain lower level risk profile for your investments, you may be looking at lessening your retirement objectives due to a lower expected return. There is an offsetting cost for every decision made and it’s important to acknowledge them and understand their impact

4.) Strike a balance – Perfect doesn’t exist – but you can come close by weighing priorities against trade-offs. What matters more to you? What can you live with? What can you not live without? From this iterative process, a route will present itself. This is your truth. This is your north star from which you (and you alone) can dictate right versus wrong in your investing approach

5.) Comfort is illusive – Just when we find our footing in investing, it always seems like something happens to throw us off course. No matter how clear we are regarding our own path forward, times of market stress and volatility can make us hesitate and second guess ourselves. Keep a notebook handy that outlines your priorities and the trade-offs you have knowingly accepted. When volatility occurs, revisit your work and know that waiting for things to be perfect is a “never-ending game.” Instead, focus on the journey and rest easy that you are on the path that is indeed right for you

Thanks Seth for the insightful post – and best of luck to all of you as you continue in your search for “more right”

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