December 16, 2022 – As the year comes to a close, it’s a natural time for self-reflection and taking stock of what has been and looking forward to what may come. With this in mind, we’re sharing some core beliefs that we’ve developed from decades of investment analysis and experience navigating challenging market environments like 2022.
One definition for risk is more things can happen than will. We expect and plan for negative scenarios, but we can’t be positioned to avoid them completely and still effectively build wealth. Being that conservatively positioned doesn’t grow wealth, rather wealth gets eroded over time.
We don’t believe it’s a worthwhile endeavor to attempt to consistently time capital markets’ entry and exit points. There is wisdom in crowds and public markets do a good job incorporating new information quickly making it difficult to outsmart them through timing.
The future is unknowable, and we believe diversification is the most effective way to guard against this uncertainty.
Trying to trade in and out of markets can frequently lead to the destruction, rather than creation, of long-term value. This can be from whipsaw (chasing recent winners only to have them reverse course, then selling to avoid regret, locking in losses and buying the next high-flyer, a repetitive cycle of buy high, sell low) and/or excessive turnover, which can increase costs and taxes.
Markets don’t behave in a normal Bell curve distribution. There are always outliers and unexpected risks but using data to make informed decisions based on probability increases the odds of long-term success.
Hiring and monitoring exceptional managers with extensive resources at the asset class level also increases our odds of success while enabling us to spend more time adding value to you through overall portfolio construction and disciplined management, as well as comprehensive personalized financial planning, ongoing behavioral coaching, and advising.
Please reach out to your Wealth Manager if you’d like to discuss anything pertaining to your individual situation in greater detail, especially if there are any material changes expected in 2023.
Wishing you joyous holidays filled with family and friends, and good health and prosperity in 2023. Thank you for the trust and confidence you place in our team each day.