Learning From The Past Can Improve Your Financial Future

Our goal as financial advisors is to provide our clients with a successful investment experience and help you meet your personal and financial goals. By working together, we want to provide you with a greater sense of comfort and security so you are not worrying about the financial markets and your investments.

There are some very important investment lessons to be learned from the significant declines in 2008-2009, and what has occurred since then. The more that you understand what has occurred since 2009, the more successful investor you will be going forward.

Who could have predicted that the S&P 500 (a benchmark of 500 large US based companies) would have rebounded 197% since March 2009? The S&P 500 was around 1500 in mid-2007, declined to below 700 in early 2009 and is now just under 2000. Some investment lessons from this period are:

  • It is vital to have faith in the resilience of companies and countries throughout the world. In times of great economic difficulty, it is necessary to focus on the longer term and ability of companies to adjust and return to profitability.
  • There will always be problems of some type (economic, political, etc). Today, as the markets are near high levels, many are predicting huge declines. We don’t know if they are correct. However, we do know from what occurred in 2008-09 that overreacting to “concerns” is not the right strategy for a long term investor who wants to be successful.
  • It is nearly impossible to accurate time the market. It is hard to properly predict when to sell at a top and then time it again to buy back at the low. This may seem easy with the benefit of hindsight, but it is not reasonable to do “in the moment.” Our long term investment policy of developing of a globally diversified portfolio for you and your family has a much greater chance of success than trying to time the stock market.
  • Those who thought “this time is different” in 2008-09 were not correct. The markets continue to teach us that being patient pays huge rewards. There will be corrections, declines and bumps along the way. We help you to have the mindset and financial plan to deal with the volatility that is inherent in investing in stocks. If you are mentally prepared for the declines that will happen again, you will be rewarded by the long-term gains in the stock market.

Predicting interest rates and inflation is just as hard as predicting stock market moves. Most analysts and even the Federal Reserve would not have thought in 2009 that interest rates would still be this low. It is important to build a fixed income portfolio that is not based on interest rate predictions.

Inflation concerns: Many people feared that inflation would be much higher now, caused by Federal Reserve actions since 2008. Inflation has not become a problem yet and appears to be well under control. We did not adjust our investment philosophy and our clients’ portfolios because of a concern about something that may occur. The key is that we adhered to our investment philosophy and plans.

What we avoided: We have not invested in hedge funds, illiquid real estate funds and other alternative investments. Many of these investments have not performed well or some investors have been unable to get their money out of these types of investments when they want. We invest in assets that are liquid, understandable, transparent and low cost.


It is important for you, and us as advisors, to take time to think and reflect on what has worked well and what has not been successful. We learn through observing, reading, researching and processing what has occurred. Our clarifying these investment lessons from the past and communicating them to you will improve your financial future.

Our writing these blog posts is one way to do this. It is a way to document our thoughts, consider investment lessons and help to plan for your future. The more we reflect on what has occurred over the past 5 years, the more conviction we feel that our investment philosophy is the proper strategy for you, your family and your friends.

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