“There’s no algorithm for empathy.” – Hannah B. Wild, on the limits of AI in Wealth Management
The last few years have given us plenty of examples of how financial journalism, in its quest to fill screen time and click quotas, will not only speculate with an air of deadly seriousness about current economic events, but proceed to catastrophize down the road to the worst-case scenario.
"Give me a break!"
I am often asked what I think will happen in the near term. I’m always happy to empathize and provide perspective, and invite you to always consider me an available resource.
With the hindsight that is always around the corner and renders our most informed, educated guesses embarrassingly wrong, there are a few things I can confidently say at all times:
1. Two things are critical to successful investing: A long-term perspective, and rational optimism regarding the future. By design, financial media provide neither. I’ve seen no evidence in my lifetime that this optimism is unwarranted.
2. The great companies are capable of taking the challenges before them, adapting, and finding ways to be profitable. We may need to give them more than a week, if they aren’t already on top of it.
3. The great investment managers are capable of pricing in all headwinds and tailwinds, and finding opportunities to deploy our investment capital for us. They’re not out to lunch during volatile markets.
4. Whatever the cause, degree, or duration of higher prices, they provide the basic rationale for investing for the future: our dollars need to maintain purchasing power over our lifetimes.
A lifelong financial plan accounts for the fact that markets and the economy change year by year; there is no scenario we can imagine where abandoning that plan would be a wise course of action.
I love what Nick Murray said regarding forecasts in his most recent newsletter:
“Nobody, and I mean nobody, knows how multiple dramas will play out. If the President, the Chair of the Federal Reserve, and the Secretary of the Treasury do not know…. An adviser is not a forecaster nor a market prognosticator.
They are a long-term planner. The twists and turns of the economy and gyrations of the market have nothing to do with them- because they have nothing to do with whether your long-term plan succeeds or not.
An advisor is good at charting a long-term course which has always succeeded over time, rather than what nobody Is good at: foretelling the immediate future.”
Here is a prediction I’m confident in: You will never hear me say “this time, it’s different.”
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.
Securities and Retirement Plan Consulting Program services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Investment Advice offered through Western Wealth Management LLC, a Registered Investment Advisor. Kennebec Wealth Management LLC and Westen Wealth Management LLA are separate entities from LPL Financial.