Dan Cuprill, a fellow Matson Money investment coach and all-around great guy, recently sent this message out to his clients. It’s a powerful reminder of why we’re doing what we’re doing. Look for the farmer/seed analogy—it’s really good…
As I write this, the Dow Jones is up over 12,100. After the news from Europe turned out to be not as dire as many thought (is it ever?), markets rebounded. Let’s look at what you did right during this time:
1. You re-balanced: Thanks to rebalancing that was completed at the start of the quarter, you were able to take advantage of this recent movement. Money moved from fixed income into equities, allowing us to buy low and maximize the benefit of volatility.
2. You didn’t try to time things: You didn’t worry about what was the right day to pull the trigger. You understood that markets move in a non-linear fashion. Over time, free markets have given us a great quality of life. While living through bad news is difficult, history has shown us time and again that it’s never permanent.
3. You didn’t obsess on short-term results: Farmers don’t dig up seeds after they plant them, and you don’t obsess over how your portfolio compares to another over a short period of time. You understand that a well-diversified, structured portfolio that eschews the evils of stock picking and market timing is your best weapon for achieving financial success.
4. You let me coach you. I’ve learned over the years that not all investors are coachable. Just like some athletes, I presume. When an investor is not coachable, I bring little value. Hence, I sever those relationships. I know that human emotions are a far greater obstacle to success than almost any portfolio. We are wired to avoid pain at all costs, even if some pain is necessary to achieve our long term objectives. As humans, we would love to get returns in a steady and linear fashion. Not possible. Life is not linear. My job is to remind you of this and keep you focused on the long-term likelihood.
5. You understood what long term means. Someone retiring today at age 65 has a strong chance of a 20-year retirement. If prices increase 4% per year, they will more than double during that time. Everyone needs to be a long-term investor.
As your coach, please accept my gratitude. I am fortunate to have such an incredible group of clients.
All the best,
I too am fortunate to be working with all of you. I hope this was helpful.