I can remember having that “light bulb moment” early in my career. It was the late 90’s, and I was eager to find out what the “secret sauce” was that gave investors an edge. I can remember analyzing the past performance of many, many money managers and continually discovering a common theme. Those managers with better long-term track records proudly admitted that they paid less attention to shorter time frames. They didn’t care what the stock market was going to do in any one, three, or even five year period. Those who ended up with better returns than most of the other managers cared more about holding onto the stocks of businesses for longer periods of time and didn’t allow short-term volatility to get under their skin.
This is how it began to dawn on me: maybe it wasn’t important to try and figure out what the market was going to do, in order to be a successful investor. Because the money manager who portrayed the prognosticator who understood all of the ingredients within the global economy and financial markets often did worse over time than the patient ones. What I’ve learned since then is that it rarely was a manager’s skill that drove results–but rather the harnessing of the long-term market forces (and the evidence behind them)–that gave you the best chance of achieving your investment goals.
If you’ve been a client of ours for a while, this story should sound familiar. And you hopefully worry less about your investments because you’re more able to tune out the “noise” and understand that your goals have a better chance of being achieved when you let markets work for you over time. If you don’t know this yet, we’d be glad to help you learn if there could be a better path for you. There really is a different way to think about investing.
PS: I haven’t watched a lot of the show The Big Bang Theory, but I’ve heard it is very funny. The Executive Producer of that show recently contributed in this article here about his own investing journey and how he now works with an advisor, and worries less. Hope you enjoy the read!
Pete Dixon, CFP®
Partner and Advisor