One Day More: What Investing Can Teach Us About Elections

As I write this, we’re one day away from Election Day 2020. It’s been a wild, perhaps unprecedented year. I struggle using the word “unprecedented,” because I’m mostly convinced that there are few truly modern human phenomena, perhaps with the exception of speed, to paraphrase Aldous Huxley.

But I do believe that there are some lessons from investing that can provide us some insight into how we might want to approach, and respond to, this particular election, and maybe even future elections as well. 

Here are a few.

Prepping for a tranquil election season

So far, 2020 has been mostly serene, and I expect nothing to change as the election approaches.

I kid, of course.

We’re 82 days away from the election, and somehow, everything is political. Infectious diseases. School openings. Football. Everything.

Some of our clients have been asking about our thoughts on the impact that the election might have on markets, so I wanted to take some time to share some evidence that can guide us toward a reasonable conclusion. The conclusion is: History has shown us that the market has little correlation with the party in power in the White House.

A couple of years ago I wrote a post, part of which discussed the fallacy of pretending to have any idea what elections mean for markets. I thought I’d revisit this with some more data.

Continue reading “Prepping for a tranquil election season”

It Must’ve Been Really Scary When…

Nick Foy, CFP®

The news over the past two weeks has moved at a brisk pace, to say the least. The state of the world from just one month ago is virtually unrecognizable at this point as we’ve made bold steps to control an invisible virus.

Our partners at Dimensional posted a video the other day to offer some perspective, and I think you’ll enjoy it. We also thought we’d share some additional perspective too. 

The world now looks a lot scarier than it did in January or February, and that got me thinking.

I’ve often wondered how I would’ve reacted as an investor in 1929, when the stock market crashed and set off the Great Depression. In hindsight, it would’ve been great to say that I would’ve closely followed the rules of finance that have been developed through decades of research, but that would’ve been difficult for a couple of reasons: 

Continue reading “It Must’ve Been Really Scary When…”

What Type Of Investor Are You?

Nick Foy, CFP®

As fears about the spread of the coronavirus continue to rile markets worldwide, I thought I’d provide another update into how we (and our clients!) are fairing.

First, I’m sure there are some clients who have had sleepless nights over the past couple of weeks, wondering when life will get back to normal. The other day, my wife asked me how I was holding up, and I told her that I’m fine but I’m more concerned for you, our clients.

However, I’m also incredibly grateful. For sure, we’ve fielded some calls and e-mails from clients who have some (valid!) concerns. But for the most part, our clients have been seeking out opportunities to accumulate more stocks at a discounted price. 

Our trading systems and processes haven’t yet been stretched like they have for the past two weeks, and I’m glad to say that we’re doing just fine.

Continue reading “What Type Of Investor Are You?”

Investing through uncertainty

Nick Foy, CFP®

As coronavirus fears have irked markets globally, it gives us an opportunity to redefine how we respond to uncertainty and its impact on portfolios.

Ben Carlson has done a nice job providing some thoughts on our headline risk du jour, but we want to give you some additional insight.

First, the nature of risk is that it’s unpredictable. And whether the cause of the turmoil is political, economic, health related, or some other nuisance, we know that the future, by definition, is unknowable.

Not long ago, the markets were deeply disturbed by the interactions between President Donald Trump and North Korean leader Kim Jong-un, and the potential for war between the United States and North Korea. Imagine having fallen into a coma in 2010 and awoken to see that as a headline. 

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Cheap is good. Free might not be better.

Nick Foy, CFP®

Earlier this month, Charles Schwab reduced the cost of trading stocks and ETFs to the lowest possible level: $0.

Since their founding, Schwab has been disrupting the industry by taking advantage of the semiconductor to reduce the cost of investing for everyone. This is a good thing. Independently, Schwab and Vanguard changed the industry more than any other two companies, and average investors are better for it. 

No longer is it the norm for brokers to charge 1% (or more) of a transaction amount just to trade a stock. No longer is it standard for a mutual fund manager to charge in excess of 1% (or more) annually to attempt to beat the market, which they rarely do anyway.

Research and technology made things better, as did market competition. 

Continue reading “Cheap is good. Free might not be better.”

It’s not what you know. It’s who you know, and what they know

Nick Foy, CFP®

Over on Twitter, Anthony Isola of Ritholtz Wealth has been uncovering the vile world of teachers’ retirement plans, which are typically high-cost annuities being sold as appropriate investment options. His findings have been eye-opening for many, though unsurprising for me.

Continue reading “It’s not what you know. It’s who you know, and what they know”

It’s not how much $$ you make (at a certain point), it’s what you do with what you make

Nick Foy, CFP®

Last week, I came across this chart and tweet:

Continue reading “It’s not how much $$ you make (at a certain point), it’s what you do with what you make”

New Year’s (Financial) Resolutions To Make Anytime

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Nick Foy, CFP®

I’m not typically into New Year’s resolutions; I tend to think that if there are things we’d like to do differently, we shouldn’t wait until January to start. And anyway, 80% of resolutions fail by February, so really, what’s the point?

Instead, consider these New Year’s resolutions, specific to your finances, that should be made anytime you’re doing something different: Continue reading “New Year’s (Financial) Resolutions To Make Anytime”

How to travel like (this) financial advisor

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Nick Foy, CFP®

Just about everybody we meet with talks about travel being one of their most important financial goals; the ability to see and share a journey with loved ones is high on the priority list for most of our clients.

I like to include travel expenses in just about every client’s financial plan, as both an acknowledgement and a reminder that experiences are more valuable than things.

My kids are now 7 and 4 ½, and they’ve already been all over the U.S., and have traveled internationally to Europe and Africa. We’ve made travel a priority, and they’re starting to get old enough to appreciate it (although my daughter claimed her favorite part of our spring break trip to Italy was the “yummy Cheerios” [Froot Loops] at the airport hotel in Boston).

Here are some tips to make your journeys as memorable as possible: Continue reading “How to travel like (this) financial advisor”