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Some Things Never Change
The Fundamentals
Some Things Never Change
Today's Newsletter:
Quote from Jean-Baptiste Alphonse Karr
Some Things Never Change
The Fundamentals
A Money Question
Quote
“The more things change, the more they stay the same.” - Jean-Baptiste Alphonse Karr
French writer Jean-Baptiste Alphonse Karr first said this in 1849. Nearly 200 years later it is just as relevant now as it was then. I don’t know if there is a better quote to articulate investing and personal finance. The world is changing, yet many of the fundamentals stay the same.
Some Things Never Change
The Texas Rangers just won their first World Series title this week. An incredible accomplishment for a franchise that has been around for 62 years. In that time, baseball has experienced an evolution.
Pitchers used to throw complete games, now they rarely go six innings. Homeruns used to be outliers, now they are commonplace. The “eye test” used to be the main form of valuation, now they rely on analytics.
Yet, with all those changes the fundamentals stay the same. The Rangers won because they had good defense, timely pitching, and clutch-hitting. The look is different than decades ago but the game still lasts nine innings and the team with the most runs wins.
As I have been thinking about this past year for our clients, the economy, and investing it feels a lot like baseball’s evolution. The look is different yet the fundamentals remain.
The more things change, the more they stay the same.
Let’s dive in!
The Fundamentals
Things That Matter:
Investments are fuel for your life. The number one thing that matters is aligning your money with your life. The way we help clients do that is through financial planning. We map out what the perfect day looks like and then work backward to determine what money steps we need to take to get there. If your money is not creating a better life, providing you more joy, or giving you security ~ What is the point?
Imagine being at a poker table and the dealer tells you as long as you stay all night you will win. Chances are you would play for more money than ever before and stay all night. In practice, investing can work the same way IF we focus on the right thing. The right thing is time in the game. The S&P 500 has been positive for 73% of one-year periods, 84% of three-year periods, and 94% of ten-year periods. Sometimes you just haven’t been at the table long enough.
No one can predict what will happen in the short term and if they claim to, be wary. Yet, every piece of data and history points to the same long-term outcome in investing, the stock market rises. It just takes time and it takes you being engaged the whole time. The impact of missing just a few days drastically changes your outcome.
If you have ever played golf, you will know this feeling. You have seemingly hit bad shots all day only to split the fairway on 18 and stick your approach shot. It provides just enough to make sure you keep coming back. Investing often feels the same way. For many years, you can see little progress only to see a massive pop right when you least expect it. The 10 best stock market days of all time all came during or just after some of the worst times in the market. Said another way, the best shot came just after you hit it in the water.
To Recap:
Align your money with what matters to you.
Time in the market drastically improves your odds.
To capture the market’s return you have to stay engaged.
The journey to building wealth will often feel like it is happening too slowly.
The Current Fundamentals:
There are two wars happening. Inflation is still discussed every week. We have a presidential election on the horizon. Interest rates are higher than they have been in previous decades.
This is all true.
What else is true:
The stock market just had the best week of the year.
95% of stocks in the S&P 500 advanced this past week.
82% of companies have topped analysts’ projections for the 3rd quarter.
The 10-year U.S. bond yield dropped signaling that inflation is starting to settle.
The above-listed items are not my opinion but rather facts. Every year you invest money there will be a list of things that make investors worry. Every year you invest money there will be a list of things that make investors optimistic. They will go by different names and it will sound “different this time”.
When that happens and doubt starts to creep in, revert back to the section “Things That Matter”.
The Lesson to Learn:
Investing is less math and more human psychology. It is as much art as it is science. It is this weird combination of seeing all the facts and trying to ignore them at every turn. We are human and money is emotional. To become a good investor you have to accept that fact not ignore it. You then need to understand what it takes for you to overcome those natural human emotions.
Some things that have helped me in my investing journey:
Ignoring the financial media
Checking my investment accounts less
Hiring a professional advisor to guide me
Remembering why I invested in the first place
Always making sure I have enough cash to weather a storm
A Money Question
How often do you check your investment accounts?
Here is my hunch, those that look less perform better. Investing is this weird thing in life where doing less often means achieving more. Let me be clear, this is not blind investing, it is sticking with a well thought out plan.
Work with Jacob
I help athletes, entrepreneurs, and executives pay less in taxes, simplify their financial lives, and invest for the long run.
Until Next Time, My Friends
Moment Private Wealth, LLC is a Registered Investment Advisor, located in the State of Missouri. Moment Private Wealth provides investment advisory and related services for clients nationally. Moment Private Wealth will maintain all applicable registrations and licenses as required by the various states in which JL Strategic Wealth conducts business, as applicable. Moment Private Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice.