BEGINNINGS, ENDINGS AND YOUR PORTFOLIO
“Life is not so much about beginnings and endings as it is about going on and on and on. It is about muddling through the middle.” – Anna Quindlen
This is the season of new beginnings and endings. Of course we are in the middle of wedding season, which in many ways is the “biggest” beginning of our lives. While I have not attended a wedding this week, I have been at 2 other lifecycle/milestones. I write this article after returning from my nephew Yishai’s Hanachat Tefillin – the first time putting on Tefillin (Mazel tov to the whole family!).
This is a certainly a beginning that is full of both excitement and apprehension. The excitement of entering “manhood” and the apprehension of all the responsibility that goes along with it. There is also the issue of the fact that this is an action that will be with you for the rest of your life. Similar to getting married, it certainly can be intimidating to think that you will be doing this for the rest of your life.
For those of you with young children this week also marks the end of gan, which means it’s time for the Mesibat Siyum– end of year pageant. I have the privilege of having two this week. Anticipation is in the air as you rush out the door with your child, and then reality hits. You have a choice; either stand for two hours or try and contort your adult body into a chair meant for a four-six year old. Then you watch kids that have been rehearsing the songs and dances for weeks in both gan and at home, suddenly either decide that the rehearsal is what is really important and the actual party is of little importance, or at the first sight of their mother, take a Neil Armstrong like giant leap right into her lap. For the kids moving up to first grade this event is also full of contradictory emotions. There is a tinge of sadness that the ‘baby chapter’ of the child’s book is closing. Everyone is getting older. On the other hand is happiness that 1. No more mesibot siyum and sitting in the little chairs that go along with them! And 2. A new chapter in life- first grade and school. Your child is growing up.
Finances
So what does any of this have to do with your investment portfolio? The answer is quite simple. Investors need to focus on the long-term. Just like when raising kids we may be nervous in the short-term, if we take a slightly longer view we realize that whether or not the child knows the dance moves at the mesibat siyum is pretty irrelevant to adulthood. Investing is similar. Don’t get caught up in short-term market movements and get scared if the market drops 4%. Keep in mind that markets have corrections frequently but it is the investor that stays patient and doesn’t panic that makes money and builds wealth over time.
Mark Hulbert writes: “If you think you will know it when this bull market finally comes to an end, you are kidding yourself. The vast majority of professional advisers who try to get in and out of the stock market at the right time end up doing worse than those who simply buy and hold through bull and bear markets alike. Even those few who beat a buy-and-hold strategy during one period rarely beat it in the next one.”
If professional investors are lousy at timing the market why would individual investors think they can do better? I get emails and calls from clients regularly worried about an impending market crash. My response to them is that: 1. Markets rarely crash and I wouldn’t be too worried about it; and 2. If they are worried about it, it means that have an incorrect asset-allocation. It means that they have too much exposure to the stock market. If you can’t afford short-term losses in your stock portfolio, you need a more conservative approach.
Speak with your financial advisor to make sure that your portfolio is in line with your short and long-term goals and needs, and make sure that it is allocated correctly to achieve those goals.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
