Happy New Year!

Happy New Year!

January 02, 2024

 Behaviors that never change are history’s most powerful lessons, because they preview what to expect in the future. - Morgan Housel

 Everything feels unprecedented when you haven’t engaged with history. -Kelly Hayes

After working with clients, investments, and other advisors for 25 years, what really matters for lifelong financial success becomes simpler and clearer to me with each passing year. 

Believe it or not, it has nothing to do with choosing the best investments or using the most cutting-edge analysis, reporting, and planning software. 

All these things go out the window during crunch time- what people believe, how they think, and what they do during tough times are infinitely more consequential than any of the other recommendations I or any advisor can implement. 

I can’t think of any other area of our lives where people occasionally need so much guidance and assistance to do …. Nothing. 

I encourage everyone who may be looking for inspiration as we transition from the events of 2022/2023 to read Morgan Housel’s new book, Same As Ever. 

One feature of our lifespans is our inability to experience things firsthand often enough to see the pattern with our own eyes.  A brief overview of even recent history shows us that the biggest events are ones we cannot prepare for.  However, what we do know is how people behave in response and what typically follows. 

Charlie Munger- The first rule of a happy life is low expectations.  If you have unrealistic expectations you’re going to be miserable your whole life.

I don’t know if I’d say low expectations; I’d insert realistic in there.

Expecting that the economy will always grow smoothly upward with no hiccups, setbacks, or downturns isn’t realistic.  However, expecting that the current tough time will end, and each bust will be followed by boom, is very realistic. 

Expecting to get hefty investment returns every year with no strings or fine print attached is not realistic; expecting that an average rate of return will emerge over the years that could keep up with your growth and spending needs is realistic.

Housel- The long run is just a collection of short runs you have to put up with.

I’ve written often about the importance of optimism to financial success.  Morgan Housel stresses again in this book that while pessimism can help us be prepared, optimism is critical to getting through things that we can’t prepare for.  Optimism is well-founded, as long as we know our history and can put things we are going through into context. 

Sometimes I sense people getting annoyed at my optimism when worries are getting them down and their instincts are telling them that the negative voices out there are the ones really looking out for them.  I get it, if I listened to all the noise out there maybe I’d want to slap me too! 

Housel says that while we think of pessimism and optimism as opposing mindsets, the best mindset can be a healthy blend of both. 

Pessimism may drive us to save and watch our spending, but optimism and faith in the future is critical to investment success.  By investing I mean participating through ownership in the cyclic but upward direction of the US and world economy to preserve and grow the purchasing power of those saved dollars during the working years, and an alternative to working into old age for many people who have even the smallest risk of outliving their savings. 

Having the right mindset can render forecasts even more irrelevant than they are for a long term investor acting on a plan- ironic in an industry that is filling my inbox up with 2024 market forecasts even as I write. 

We can’t ever completely prepare ourselves for what hasn’t yet been written, but we can use what has been written many times to prepare ourselves as best we can.

My wish for 2024 is that we can all put the last few years into our memory vaults as important experiences and renew our optimism and commitment to the wellbeing of our future selves, come what may. 

I look forward to visiting with you over the coming weeks.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.

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Registered Investment Advisor. Member FINRA/SIPC. Investment Advice offered through Western Wealth Management LLC, a Registered Investment Advisor. LPL Financial, Kennebec Wealth Management LLC and Western Wealth Management LLC are separate entities