How Is A Horror Movie Like The Economy And The Markets?

I am not a big fan of scary movies.  You know, the ones with the guy in the hockey mask or the girl with the head-spinning thing; that’s just not for me.  If I’m honest even just typing those words made me cringe at the memories of seeing those scenes.  But there’s an analogy going on between those films and the economy and the stock market.  Bear with me, and I’ll explain (hint: it’s not scary).

In those movies, there is a point in which you realize something really, really bad is about to happen.  It’s that “oh boy, this is going to be very terrifying” type of moment.  Physiologically, some people might experience an increase in heart rate, dryness of mouth, eyes watering or goosebumps.  The emotion known as fear is palpable, and we’re anticipating something but we have no idea what to expect.

Some would say (I can’t) that the best horror film keeps this feeling “alive” in you for as long as possible–drawing you in, and keeping you engaged and fearing the absolute worst.  Then there is that point that we’re let in.  We see the monster, or the face, or the ‘thing’ coming out of the TV and it’s in front of us.  It’s at this point that something begins to change.  It might be scary, but we know what we’re facing now–it’s in front of us, and there’s almost a sigh of relief as we begin to adapt to a new phase of the film.  Some might say “this isn’t really that bad” and the heart rate returns to a more normal pace and the goosebumps subside.  Things still need to be dealt with in the movie, but we at least know what we’re dealing with.

How are the economy and the stock market similar to this?  > SEE MORE

Pete Dixon, CFP®

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Pete Dixon, CFP®

Partner and Advisor

Yesterday, Today, Tomorrow…Where Are We?

I recently had a conversation with my youngest son, who is seven years old.  “Daddy.”  He says.  “A few days ago I built a fort and it was fun.”  “That’s great,” I tell him.  “When exactly did you get to do that?”  “Tomorrow” he replies, before correcting himself.  “No, no.  It was tonight. I mean yesterday.”

This exchange has been typical as Zachary learns where he and his (very important) events lie on the spectrum of time.  Something from the past has occurred but putting it into the context of when exactly that took place (and verbalizing it correctly) is something he is learning to do.  Understanding when something took place in the context of time is a bit of a challenge for him right now.

To me, this is similar to the perspective we can have with our investment portfolios and the markets.  > SEE MORE

Pete Dixon, CFP®

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Pete Dixon, CFP®

Partner and Advisor

Well, How Do You Think About Your Retirement Income?

One of my favorite analogies for explaining retirement income is comparing it to taking water from a well. I realize that we’re fortunate and don’t need to do that much in this country, but let’s pretend that every day you go to a well to get your drinking water.  Of course, you need to rely on it for providing you with water for a very, very long time. In order for the ability to quench your thirst for decades, you want to be sure you have enough of a supply of water at all times.  But, you cannot control how much this particular well gets replenished with rain, so you would be careful to only take out the necessary amount to meet your needs, while not taking too much out and running a high risk of drying out the well.  The level of the water, in the meantime, will rise and fall depending on the season you’re in – those rainy, plentiful seasons, and those dry and arid times when there isn’t any replenishment.  Your job is to take what you need from the well, while having confidence in the ability to drink water even during those dry times.  Through rainy seasons and dry ones, you need to be able to rely on a steady source of drinking water.

Retirement income is similar to this, isn’t it?  > SEE MORE
Pete Dixon, CFP®

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Pete Dixon, CFP®

Partner and Advisor

What’s THE Most Important Thing You Can Do To Prepare For Retirement?

I was thinking about this question while reading an article a client sent to me.  You can find the write-up here, and it’s a helpful “countdown to retirement” with many tips to consider as you approach retirement.  As I looked through the list and thought about covering these issues with our own clients over the years, the question came to mind: what is the most important financial planning step you can take to feel great about your retirement plan?

It’s really a tough question since there are a lot of important issues to consider when “taking the leap” away from a career that you’ve had for so many years.  Topics such as health insurance, do you have enough saved, are you invested properly, Social Security timing and others are obviously important to explore.  There’s also the softer part of the equation: how will you spend and enjoy your time?  Should you still work?  How will you miss the social aspect of working and contributing?

But if I were forced to answer, what would I say is the most important question?  That’s when I realized it’s the one that I have been recommending most lately when helping someone plan for retirement.  It’s this simple question: how much do you need to live on (and how sure are you of that?)?    > SEE MORE

Pete Dixon, CFP®

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Pete Dixon, CFP®

Partner and Advisor

Would You Pay For Your Doctor’s Trip To The Bahamas?

What if you knew that your doctor was more highly trained to sell you a specific drug that paid him much more money than any other suggestions he could make for you, even if it wasn’t in your best interest?  On top of that, what if you knew that this doctor had sales targets where his income would increase drastically for selling enough of this medicine each month?  He could provide you with advice and receive his standard fee, or he could suggest that you take this drug and he would receive $70,000.  In addition, if he sold enough of this in a certain time period, the drug company would send him and his family to an all-expense paid, posh trip to the Bahamas.  Does he maintain his ongoing education as a doctor?  Sure, he does—enough to maintain his license.  But more of his training these days is put toward attracting ‘customers’ into his office to convince them to buy this drug.  I mean, why wouldn’t he?  The opportunity is to make millions more per year, so he’d prefer to hone his skills with talking you into buying more of this drug, and getting to know your friends and family so he can sell it to them too.

 

Here’s a question for you:  would you work with this doctor?

You might say “of course not!”  And I certainly wouldn’t either.  But what if I told you that this is exactly what is going on in the investment industry? > SEE MORE

Pete Dixon, CFP®

Posted by:

Pete Dixon, CFP®

Partner and Advisor