Transitions, Discipline and Milestones

Ten years ago, during a beautiful fall week, we moved into our current office space. We enjoyed the picturesque view outside our windows of the leaves changing colors. Keith and I were excited about our future. The S & P 500 was around 1,250.

The US stock market had declined almost 20% during the prior 11 months, but we had no idea what would occur in the coming weeks, months and years.

Five years into our financial advisory firm, in our new offices, we soon faced the bankruptcy of Lehman Brothers, the AIG bailout and the financial crisis of 2008-09. At the bottom of the economic collapse, in March of 2009, the S & P 500 had declined to 682, down 57% from it’s October, 2007 peak.

Today, the S & P 500 is around 2,880. Worldwide stock markets have strongly recovered from the depths of the financial crisis.

As a firm, we have grown significantly over the past 10 years. As we mark the milestone of 15 years as a financial advisory firm, we are very fortunate and truly appreciate the loyalty of our valued clients. We appreciate the trust you have placed in us and are grateful for the referrals that many of you have made to friends and relatives.

As we look forward and back, some key lessons apply as much today as they did 10 years ago.

We had many conversations with our clients during the financial crisis.  We listened to their concerns and we encouraged them to remain disciplined, to stick with the investment plan we had developed with them. We continue to have these type of conversations, as economic and political challenges and uncertainty are always with us.

Many people thought the world was coming to an end 10 years ago, at least financially. It didn’t….and it has recovered. The recovery may have been slow, but as an investor, the past 10 years have been good ones. Our clients have been able to grow their assets and live off of their investments, depending on their stage of life.

This time was not different. The crisis of 2007-09 was not different from other market crashes which preceded it. The key is that financial markets recover. We didn’t know how or when, but we had faith that there would be an economic and stock market recovery. If you are going to invest in stocks, you need to believe that most companies will adapt and their earnings will grow over time.

As it is very difficult to consistently identify which companies, sectors and countries will succeed or fail in the future, we believe in diversifying broadly across many companies and geographic regions. This strategy gives you the best change of success and minimizes your risk by not placing concentrated bets.

Today, with many US market indices at or near all time highs, many are asking the opposite question. Have US markets reached new peaks? Will they go higher?

We believe in rational optimism and being rational to deal with uncertainty. These principles enable us to provide you with financial and investment advice that is timeless and will work, if you are disciplined and patient.

We remain rationally optimistic about the long term financial markets, both in the US and overseas. We know that we cannot time the markets and predict a peak. History and academic data teaches us that corporate earnings will continue to grow, which will lead to higher stock markets in the future, both in the US and Internationally.

We know that certain asset classes that we recommend will trail other asset classes at times, but over the longer term, this diversified strategy will provide you with a smoother and more successful investment experience.

If you focus on your long term financial goals, such as how much money you will need annually for retirement, you will have a much greater chance of success. We strongly encourage you not to be distracted by day to day headlines, politics and the barrage of predictions and economic forecasts.

Fall is a time of transition and change for many. School starts. Students move to college or begin middle or high school. These changes can be positive or negative. For those who are Jewish, next week begins the Jewish New Year, a time of reflection.

Over the past 15 years, Keith and I, along with our firm members, have dealt with all kinds of changes, both personally and professionally. Change, transition and unpredictability will always be with us. To deal with this, we remain very confident in our investment principles and guiding beliefs, which enable us to provide each of you with expert financial advice tailored to your specific situation. We want you to be disciplined and not make reactive decisions.

We hope this provides you with greater comfort and financial security, as we all deal with change and uncertainty.

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