So, to begin this blog post, let’s talk about what doesn’t really matter – the markets! The first quarter 2023 is off to a pretty good start – most well diversified portfolio’s are up in 5-6% range YTD. That’s a nice bump to start the year from being down about 16% in 2022. The Fed’s plan of raising interest rates seems to be successfully putting the brakes on economic growth and in turn tamping down inflation. As is the case with most any economic reset, there is some pain involved. But, things seem to be stabilizing and returning to a sense of normalcy. We have always looked at corrections/transitions as normal and important events. In fact, they are healthy! They flush out the fat, weirdness, and flat out bad things that lie under the surface during the boom times. So whenever someone complains about a bad market, we remind them that’s is usually a necessary step to resetting so that we can continue the climb forward and upward over time.
There is absolutely nothing any of us can do about inflation, markets, returns, and timing of corrections. We can’t control or predict any of it so why even attempt to try. It’s a waste of energy, resources, and only leads to drama and emotion. Instead we urge our clients to focus in the things you can control – living within your means, investing regularly, building a business/career, diversifying your assets, and covering your ass. Over time the markets will go up and down and hopefully provide you with a 5-7% average return over the next ten or twenty years and you will be able to achieve your goals. Your primary concern should shift to how all those things withing your control can be managed so that you don’t run the risk of outliving your assets.
Life is all about balance – doing everything in moderation. But, when moderation shifts to over emphasizing any one thing over all the others – trouble ensues. Frankly it’s just like what happens in the markets – for example, if banks lend money to anyone who is simply breathing, it probably won’t be long until something (real estate market) comes crashing down. Same thing is true in your life. So, for the remainder of 2023 try to achieve that balance. Focus on the things you can control with your money (and other things of course). Ignore or delegate to others the things that just don’t come naturally to you.
It’s impossible to predict where the markets are going to end up at the end of the year, but, we can assure you that if you achieve that balance and chip away at the little things, the big things will take care of themselves.