Looking forward and backwards

Blog post #478

We often find things when and where we least expect to.

This past weekend, I attended a Bar Mitzvah ceremony for my cousin’s son.  I was one of less than 20 people who were physically in attendance.  Instead of hundreds gathering, it was mostly virtual.

Prior to the service, I read a few pages of quotes at the beginning of the prayer book. Two of them particularly resonated with me. While these are not directly related to financial or investment matters, each could be relevant to your financial well-being and your financial future.

Life is a continual process of getting used to the unexpected.

~Unknown

We know that the future is unknown and unpredictable. Change and unexpected events are part of our personal lives, as well as in financial markets. The world keeps changing. You must make decisions all the time. Some are big and important, some are small. Change is constant. We can help you deal with change and the unexpected.

Our firm’s investment and financial planning philosophies are rooted in accepting that we can’t accurately predict the future. We recognize that market timing and individual stock picking are not the best strategy for the core of your long-term portfolio, to enable you to reach your goals.

We plan and develop strategies, such as how much risk you need to take, that are not dependent on our ability to predict the future.  These should help you to get used to the unexpected things that occur in your life, as well as in the world and the financial markets.

Life can only be understood by looking backward.

But life must be lived by looking forward.

~ Menachem Mendel, 1800s Rabbi

This is logical and simple. Financial decisions must be made looking forward, but as this and the first quote tell us, we don’t know what the future will look like.

We don’t know what interest rates or inflation will be. We don’t know what broad stock market returns will be over the next 1, 3, 5 or 10 years.

We do know that we can learn a lot by what has happened historically and financially in the past.  We can use the past, which we study and try to understand, to provide you with advice and recommendations for the future.

  • We use historical financial data to help us develop financial strategies. We look to the past, to help us plan for your future.
    • Financial history shows that broadly diversified, global portfolios have outperformed the S&P 500 (US large companies) over the long-term. Thus, we recommend broadly diversified portfolios to our clients.
    • Financial data tells us that mutual funds and ETFs with much lower than average expense ratios outperform those with much higher internal expenses. Thus, we use less expensive investments when possible.
    • We know that interest rates are near historic lows, so you should be refinancing any debts that you have.
  • We know that risk and return are related, so we try not to take excess risk with fixed income investments, as these are the “safe” foundations of your portfolio.

We strive to provide you guidance and advice that will be timeless, that will be effective for years into the future. We don’t advocate fads. We stress diversification

A diversified portfolio may not be exciting at times, but it should help you reach and maintain your goals.

Talk to us. We want to listen. We want to assist you, your family members and friends.

 

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