Most Popular ArticlesSeptember 29, 2009
Remember, this is the tale of two investors, and they had very different experiences, but now their future probability for excess is not tied to anyone’s ability to pick stocks, funds or beat the market. No, what these stories of two very real families have in common is the commitment to frame the conundrum we all face with absolute truth and real discipline.
Mr. and Mrs. Patient survived the downturn of 2007-2009. As the Dow fell from roughly 14, 000 in 2007 to nearly 6,500 in March of 2009, they were happy to run into their alpha-seeking friends at cocktail parties. We helped the Patient family replace anxiety about the present with confidence in the future success of their plans, and when the chips were down, we were all pretty pleased. Giving money away in the markets is never enjoyable, and this time around we gave back a lot less.
The journey has not been nearly as fun for the Alpha Seekers, but when their financial plan dictated a need to maintain high equity exposure we did it. It wasn’t easy but it paid off nicely. Both Mr. and Mrs. Alpha have needed a bit of handholding along the way. But I come armed with facts behind the science of investing and the probability of excess rather than just a bunch of Wall Street research designed to create velocity of trading and investment banking fees.
One more thing; from the very beginning we told Mr. Alpha Seeker the truth: that he needed to return to the workforce. Rather than look the other way and allow this family to drain their nest egg, we faced to truth together and today the Alpha Seekers might well be renamed the Little Landlords, as they have begun to accumulate and manage a stable of rental properties that generate steady cash flow and help to both pay bills and create future wealth.
In the end, both the Alpha Seekers and the Patients will be “okay.” While we may now be exiting the “age of foolishness,” surely it will one day return and some new form of madness will overtake Wall Street and perhaps the rest of the world. Regardless, my clients will be “okay” nearly 90% of the time—based on fact, not fiction. Not because we beat the market, not because we found the best money manager, and clearly not because we over-weighted energy, alternative investments or any other Wall Street nonsense.
No, we will be “okay” because we don’t swing for the fences only to strike out in the bottom of the ninth inning. We added a dynamic financial advising process and the discipline to use it properly to our arsenal, and now we all sleep a little better at night.
Brian Murphy is the founder and CEO of Pathways Financial Partners, a Tucson, AZ-based advisory firm, and uses Wealthcare in lieu of traditional financial planning.
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