Lions and Tigers and Bears, Oh My!
I had a client say to me the other day, “Gavin, I know it’s never a good idea to try to time the markets, but with everything that’s going on right now, the election, the situation in the Middle East and implications for the energy markets, North Korea potentially joining in the Ukraine conflict and possible escalation there, I just see a lot of issues that could negatively affect the markets. What do you think?” And my initial reaction to that statement, a statement, the likes of which I have heard many times, was two-fold. On the one hand I thought ‘Well at least my message of never trying to time the markets seems to have gotten through to some extent.’ But of course, there was also my realization that despite my client’s ability to repeat that mantra, the rest of his statement made it clear that there was more work to be done in order to have that message truly sink in.
Now, despite the title of this article, I’m not trying to suggest that the issues out there at the moment aren’t significant, or even that they will have no effect on markets. Quite the contrary, in fact. We are less than two weeks out from an extremely consequential election, with massive implications for our country both socially and economically. I am keenly aware of the anxiety people are feeling about the outcome, and as a financial advisor in Berkeley, CA, I am certainly sensitive to the fear so many in our progressive corner of the world have about a potential return to the chaos of another Trump presidency.
The situation in the Middle East is absolutely horrific to behold, and the destruction it has brought to so many innocent people in the region is a tragedy, and seemingly with no end in sight. And while the human toll is obviously the most lamentable result, it is true that an economic price may yet need to be paid as well, if things continue to escalate and energy markets do indeed get roiled. So, too, the conflict in Ukraine, which unbelievably is nearing three years in length, has the potential to negatively impact the broader world, even beyond the devastation it has already wrought upon the people currently involved.
These are all legitimate concerns, to be sure, and ones that weigh on my mind as well. But what I am suggesting is that when it comes to your investment portfolio, when we say “It’s never a good idea to try to time the markets,” we mean exactly that: never. We don’t mean never try to time the markets except when you think the issues we’re currently facing are pretty dicey. Or, never try to time the markets except when there’s an election with a wannabe dictator on the ballot. We mean never, as in not ever.
Because it’s precisely in those moments when things look the most unsettled that’s it’s vital to remain vigilant and stick to your guns. It’s also why investing can be so difficult. You see, it’s easy to stay the course when everything looks rosy. The trick is sticking to your plan when everyone else is wringing their hands and looking for the exits. It’s why so many individual investors underperform over the long-term. They simply can’t fight off that feeling that ‘it’s different this time.’ I don’t know what’s going to happen on November 5th, and I have no idea how the conflicts in the Middle East or Eastern Europe will be resolved, but I do know this: no matter what the outcomes, and no matter how those outcomes make you feel, it’s never a good idea to rip up a well-thought-out financial plan or investment strategy because of how we think or feel about global macro factors like those above. So if, like most of us, you’re feeling anxious or nervous about current events, particularly as they might relate to your investments, the best thing you can do is to fight the urge to make any changes based on those feelings. And if that doesn’t seem to be working, we hope you’ve got an advisor who can provide the perspective you need to avoid making any knee-jerk reactions that might derail your long-term plans.
Disclosure
This commentary on this website reflects the personal opinions, viewpoints and analyses of the Topel & DiStasi Wealth Management, LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Topel & DiStasi Wealth Management, LLC or performance returns of any Topel & DiStasi Wealth Management, LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Topel & DiStasi Wealth Management, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.