Any time we experience a significant event in the U.S., I often hear the question, “How will the markets react?” At these moments, the talking heads will go on TV and attempt to reassure investors that they have access to the investing Magic 8 Ball. They know how the markets will react, and they’re more than happy to tell you about it.
The problem is that the talking heads and the financial press aren’t asking the right question. We already know how the market will react. At some point, they’ll go up. At some point, they’ll go down. That’s how markets work. Attempting to predict what the markets will do next ignores investing fundamentals people like Benjamin Graham, Warren Buffett, and John Bogle have tried to pound into investors’ heads for decades.
The questions that matter are your questions. How much can you reasonably save in a year? How close are you to retiring? How do you want to use your money? Do you have others dependent on you for their financial security? All these questions share a common theme: It’s about you.
They also get to the heart of what matters most to individual investors. And yet, the financial press prefers to talk about an unknowable future that can’t be forecasted. Because markets can’t be predicted, it gives each round of “experts” more opportunities to pontificate. That’s why there’s a big difference between someone who tries to predict the markets to earn a headline and what we do at Strathmore Capitol to help you and your family. In fact, I think it’s fair to say it’s the exact opposite, and I hope it’s a philosophy that comes through every time we discuss your investment strategy.
The questions we care about answering are your questions. We use those answers to ensure we provide investment advice that fits your needs. The big question of the day for us isn’t what the markets might do next week but whether we’ve answered your questions in a way that helps you feel confident about reaching your goals.
There’s a reason that investing disclosures must include the line, “Past performance is no guarantee of future results.” No matter how good someone thinks they are about predicting what the market will do, there are no guarantees. But that hard truth doesn’t fit neatly in a headline. That’s why it’s so frustrating to hear people focus on questions that go beyond things investors can control.
As advisors, we want you to ask questions. But the right questions will have nothing to do with something so superficial as, “How will the markets react?” Instead, we’ll work with you to ask the questions that help secure your financial future.
With the start of a new year, I also want to wish you and yours a safe and healthy 2021. The last year has been a difficult one for us all. But I’m confident we’ll see good things happen during the next 12 months, and I look forward to answering your questions.