Broker Check

Eat Your Wheaties and Stay the Course


I've had enough and I really don't want to talk about this anymore.

I want out.

Out of my house, out of my mask, out of uncertainty, and definitely out of the year 2020.

Since March, we have had a little too much family togetherness at home and a complete lack of normalcy in work and personal activities.

First quarter 2020 also gave us a 34% stock market drop between February 18 and March 23 [1]. Second quarter GDP numbers were -32.9% [2] and the unemployment rate in June was 11.1% [3].

As financial professionals, we have witnessed the mental health toll. Clients who are typically positive, upbeat, and can-do in their attitude are uncharacteristically pessimistic.

Some question if long-term investing is smart or even realistic in a time of such uncertainty. They worry that this crisis is different somehow and nothing will ever be the same again. Of course, the 24/7 news cycle only re-enforces anxiety and pessimism, regardless of which "side" we are listening to.

At the risk of sounding cliché, we still believe in long-term saving, investing, and planning.

And historical data is on our side. Here's a great picture to give us perspective:

Dow Jones Market Data lists 12 epidemics from 1981-2019 and shows S&P 500 index performance 6 and 12 months later [4]. In almost every 12-month period, the index was up and it was up after 5 years in every case.

It isn't just health scares, though. In times of war, natural disasters, political elections, recessions and more, the market has consistently grown over long periods of time [5].

Even experienced investors can be influenced by emotion. "It's different this time" is the sneaky mantra that is the root of many bad decisions. While that's actually true, it's always been true.  Fear, despair, and current conditions can easily cause us to lose sight of the benefits of a truly diversified long-term portfolio, which is what all of our clients possess [6].

Projecting fear, predictive thinking, and severe disillusionment into our investing behavior is not only bad for your mental health but dangerous to your long-term financial well-being as well. It can lead to speculation and market timing with longer term investments, which is proven to cause obsession and fear-exactly what people are trying to avoid when they invest with professionals.

While buying "low" and selling "high" are conceptually simple, the reality is complex. What is low? What is high? How does an individual determine favorable pricing?

Even if we nail the pricing piece, timing is another issue.

You have to get the timing right on both the buying and the selling side. After you sell, your money sits idly in cash while you ponder when to get back into the market.

Then you must correctly predict what will be the best and worst performing time periods.

Check out this chart if you are not convinced:

Our advice is to eat your Wheaties and stay the course, which we think is the investment meal of champions. Okay, had enough of this topic? When you get to your "enough" moment with investing, open this article back up or give us a call. We're here for you through it all.

Matt & Greg

[1] Forbes
[5] Capitol Group
[6] Capitol Group
BridgeQuest Wealth Strategies

BridgeQuest Wealth Strategies

Career changes, retirement, aging parents, liquidity events—navigating life’s big transitions gets much easier with an experienced guide. The BridgeQuest team leads you in the right direction with independent asset management tailored to your goals. Your plan will include objective advice and personal attention every step of the way.