When you listen to the financial news commentators, it can feel as though financial markets and investment decisions are unpredictable and subjective. Over the short-term, that might be accurate; however, over the long-term, there are universal investment principals that should govern our success along with guiding our investment decisions. Moreover, adhering to principals such as balance, consistency and courage helps keep us on course while providing a buffer from the constant drone of crisis and fear promoted by the majority of the news and media outlets.
Our investments float in the ocean of history and are affected by the winds of economics, politics and human nature. In a culture that arguably does not study history or economics as much as it should, these insights can provide a much-needed long-term perspective in a world of "breaking news.” History has repeatedly proven that we, as the United States of America, have extraordinary resiliency, creativity and innovation, which have propelled our stock market higher over time regardless of the current crisis.
During my 32 years as a financial advisor, it has been my experience that the vast majority of people are pessimistic when it comes to the economy and the stock market. I find this notion remarkably counterintuitive because it rests on the concept of insoluble crisis, which just does not square with the facts. If humanity has shown one aptitude, it is the capacity to adapt and to learn. Compare our response to the financial crisis of 2008 to our response in 1929. Human ingenuity, technological innovation and the inherent limits of long-term forecasting are never factored into the “crisis” debate.
I suggest that one of the most powerful and pervasive principals in business and life is consistency. Ironically in today's society, I argue that it is the most violated principal. Doing the right thing occasionally normally ends poorly. Think of all the things in our lives in which we underachieved or failed due to a violation of this simple yet profound principal. Consistency requires the support of two other principals: patience and persistence. Remember that anything valuable in life takes time to manifest. This is as true for our investment performance as it is for good health, a fulfilling marriage or raising wonderful children. In other words, there are no quick fixes. We simply must stay the course.
In closing, I put forth that there are two ways to journey through the wild volatility of the stock market: succumb to “fear” or have “faith” that the stock market climbs the wall of worry and eventually sets new highs over time. Perhaps like you, I have always selected faith over fear. Sure, I get nervous and concerned when we witness the eventual gut wrenching declines. However, I will not allow my emotions (fear) to dictate how I manage my portfolio. Instead, I stay the course and have faith that it will only be a matter of time before the stock market bottoms and then begins its march to new highs. Yes indeed, I steadfastly argue that having faith is incredibly more productive than being fearful and more importantly acting on our perceived fear. Nuff said: cheers to faith!
Harry Pappas Jr. CFP®
Managing Director-Investments
Master of Science Degree Personal Financial Planning
Certified Estate & Trust Specialist ™
Certified Divorce Financial Analyst™
Pappas Wealth Management Group of Wells Fargo Advisors
818 North Highway A1A, Ste 200
Ponte Vedra, Florida 32082
904-273-7955
harry.pappas@wellsfargoadvisors.com
The use of the CDFA™ designation does not permit Wells Fargo Advisors or its Financial Advisors to provide legal advice, nor is it meant to imply that the firm or its associates are acting as experts in this field.
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a Registered Broker-Dealer and a non-bank affiliate of Wells Fargo & Company.
The opinions expressed in this report are those of the author(s) and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.
