Dealing with Uncertainty
TL;DR: more cute dog pics below 😊
Over our 20+ years in the industry, my partner Sarah Yakel and I have heard the refrain ‘I’ll get out of the market now and get back in when things look better’ countless times. In the least accusatory tone possible, that is almost never the right thing to do. Long-term investing often means fighting our human urges to flee from trouble. The market is down, so it’s time to run for safety. Missing just a few of the best-performing days of a volatile market period can significantly affect returns.
While it’s often frustrating to hear for some of our clients, we as investment managers will never completely “get out” of the market. Rather, we will maintain a well-diversified portfolio that invests in many different parts of the market and make minor adjustments (rebalancing) along the way. Yes, in rare cases, we have sold specific positions because of underperformance or an outlier event, but we quickly redeploy that money into other assets that we feel will increase over time. As I’ve said before, being diversified means there will always be something in your portfolio that you hate. Said with a more positive spin, it means you will generally reap the most benefit with the least amount of risk.
Our French Bulldog Daisy was recently faced a similar dilemma when we added yet another French Bulldog to the family in the form of Rosie. Unsurprisingly, they didn’t exactly get along perfectly right away, and it seemed like Daisy’s first instinct was to run! If you weren’t already aware, French Bulldogs are the exact opposite of a working breed, so the chances of Daisy surviving on her own after fleeing our house are next to nothing. I’d like to think that after some initial panic, Daisy prudently weighed her options and decided it would be best to try to get along with Rosie rather than get the heck out!
I hope you and your families enjoy the rest of your Summer and you face your next obstacle with prudence like Daisy did.