Investment Lessons and Thoughts of the past year

As the New Year begins, it is a time to reflect on the investment lessons of 2013, to think about what worked well and contemplate the future.

Some lessons and thoughts from 2013:

  • The past year again taught us it is best to focus on what we can control.
    • When 2013 began, the country was fixated on the “fiscal cliff.” There was not much public optimism about the stock market or the economy.
    • By adhering to the financial allocation we designed for each client, rather than focus on Washington’s lack of productivity, our clients benefited.
  • Most market forecasts are not likely to be accurate or reliable, so don’t rely on them.
    • Few would have predicted the significant gains of 2013 in most stock market sectors.
    • Rather than focus on market predictions or guesses, we work with you to make progress on your specific goals, issues and challenges.
  • Be resilient and positive.
    • We have been consistently more positive than the generally negative slant of the media. We think the economy is slowly, but consistently strengthening.
    • Companies and countries, over time, have shown an ability to deal with challenges and overcome obstacles.
    • We have had many conversations with clients about these matters over the past year. Clients find these discussions very helpful. If you have concerns about things like the federal deficit, inflation or other matters….please talk to us.
  • Discipline and rebalancing are very important.
    • Our clients again benefited this year by adhering to our consistent investment philosophy of global market diversification, having an investment plan and rebalancing back to their target stock allocation.
    • Having discipline and sticking with your equity allocation through good times and difficult stock market conditions is the proper long-term strategy.
      • The long-term trend of stock markets worldwide is upward, even through major bumps in that upward trend.
    • While the markets have been positive the past few years, it is important to remember that the broad US stock market has had 13 significant declines since World War II (the mid-1940s), averaging losses of approximately 30%. There will be down markets, averaging one every 5-6 years, but they are temporary.

We have spent time with clients during the past year assisting them with matters that are not directly related to investments, but are very important. We have advised clients on their estate planning, insurance questions, charitable planning, Social Security and beneficiary designations of retirement accounts. We would be pleased to talk to you about these or other financial matters that are important to you.

Note:   This is an excerpt of the quarterly client letter that was mailed to our clients in January 2014, along with their quarterly reporting statements, which are easy to read and understand.


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