Every long-term wealth management plan requires patience.
And that’s one of the toughest parts – waiting for things to unfold, particularly with the avalanche of data from every direction and type of media always at our fingertips.
Turning down the volume as emotions rise and volatility starts can sometimes be the difference between good and bad decision-making.
Because somehow over the years Wall Street messaging has redefined "volatility" as something to fear, to recoil from, to try and avoid, and to erase whenever possible.
The more deeply-seeded the fear becomes, the more "products" Wall Street will create to "help allay your fears..."
The dirty little investment secret about volatility is that your efforts to avoid it dramatically reduce your rate of return.
Volatility is not risk.
Volatility is a cohesive part of "the market." It creates your future rates of return. No volatility equals little to no return.
The economy is coiling right now.
Right when you think it’s about to collapse it surprises to the upside.
After almost 40 years in this business I’ve learned the tougher and uglier the setback, the bigger and more robust the recovery.
But you don’t need to buy into my words.
History proves it for me.
All the previous tough periods we’ve gone through took place at much lower price levels in the markets than we’re at today.
The Short-Term Issue
For the next few weeks, it will be wall-to-wall politics - nasty rhetoric, deceptions, and vitriol.
And since I started in 1982, we’ve had lots of US Presidents and many terrible things have happened. And while all of that was unfolding the Dow Jones has gone from sub-1000 levels to circa 28,000 today, and just single digit percentages away from all-time highs.
The markets, businesses and people adapt.
And together we will accomplish more in the next 10 years than we have in the past 30 plus.
For a quick refresher click on the image below for a short video review of the larger events unfolding ahead:
It will be easy to fret and worry and buy into the crowd psyche as the election fast approaches.
Just as it has been easy to agree with the naysayers who have been screaming from the rooftops every year that the end is nigh.
That’s why building wealth is hard. You must disagree with that consensus.
After all, if the consensus were always right, everyone would be wealthy, right?
Right now, the consensus of investor sentiment stinks.
Now, have a look at the collage of data that’s been thrown at us over the last six months:
The point in showing you all of this is that ignoring what comes in over the bow is more beneficial to your wealth and security over time.
While there is admittedly a mountain of improvement still to climb, and much retraining to do for lower-paying jobs lost, there has been jobs improvement from the darkest days a few months ago.
And it has been significant:
Ok, we still have a long way to go but we’re on the right path despite being right inside the Covid storm.
And keep in mind what happened during the last run up to an election.
We saw a record string of down closes, and then the markets basically went up for 3.5 years.
This time around we will also be in the early stages of Q3 earnings reports - with a vital focus only on the 2021 chatter and projections.
The Q3 data will be media fodder and grist in the mill, churning your gut with concerns that will mean nothing 90 days from now.
Waiting is hard folks, but it pays off.