During my fun and perhaps misspent youth, I listened to the album Who’s Next by The Who until the vinyl crackled under the repetitive pressure of the needle and the dreaded “skip” became part of the song. “…Its only teenage wastelaaand … [skip] wasteland …[skip]…. wasteland …[skip]…. wasteland “… Argh! What a downer, grab me a brewski!
These days I find myself sounding like a broken record on our Westfield Financial Planning: Greatest Hits! Our Number 1 Hit with a bullet? Stay the Course!
bro·ken rec·ord noun
- refers to a person's constant and annoying repetition of a particular statement or opinion
We are long-term, plan-driven investors. We believe the most reliable way to capture the full return of stocks is to ride out the frequent, but historically temporary, declines. Reacting to current events and the shrieking media will inevitably result in substandard returns. The unpredictable economic market and political chaos since the onset of the pandemic have demonstrated how the economy can neither be consistently forecast nor timed.
Unrelenting chaos continued in 2022. The central issue of the year was the very aggressive efforts of the Federal Reserve to bring inflation under control. The equity market rose 700% over the course of 13 years following the low of the Global Financial Crisis on March 9, 2009. This past January 3rd, the US equity market sold off sharply: at its most recent trough in October, the S&P 500 was down 27%. The Bloomberg Aggregate Bond index was also hammered down 16% in that same month.
I find it remarkable that the mainstream equity market managed to close out 2022 significantly higher than it was at the end of 2019 for a gain of 18.8%. Not bad for the three years during which the entire economic, financial, political, and geopolitical worlds blew up! This, of course, validates our core investment strategy of tune out the noise and continue to work your long-term investment plan. Stay the Course!
I understand it is difficult to believe this every time the market gyrates and financial journalism howls over some meaningless economic datum. I feel your apprehension, however, it should help if you remember that our portfolios largely consist of enduringly successful companies. These businesses are opportunistically refining their strategies to meet the needs and wants of the eight billion people in our world. What a fantastic opportunity.