Craig's Corner - Having a Plan

Founding Principal & Managing Director, Craig Robson

It is a new year, with new economic forecasts, and depending which forecast you read, you will see there are many varying viewpoints. I am frequently asked to provide my thoughts on future economic projections, however, as I share my views, I acknowledge, I, nor anyone else truly knows.

I often say to our clients, the best course of action is to create a financial plan and use it as your road map, regardless of the challenges you may encounter along your journey. I believe greed and fear are the two extremes, that you should avoid when making financial decisions.

It's important to remember, that capital markets have a tendency to repeat themselves, which supports the importance of having a long game.

Specifically, I like to point out the opportunity cost when missing out on the five best trading days in the equity markets. For example, the annualized returns in the S&P 500 from 1988 through 2019 was 10.7%. However, if you were not invested during the five best days, the annualized returns were instead only 4.1%. To further illustrate this point, for the first nine months in 2020 the S&P 500 returned 5.6%. But, if you were not invested during the five best days, the S&P 500 lost 26.8%.1 The key takeaway here; the value of time in the market, instead of timing the market!

In this new year, I am sure most of us have created a plan or list of action items we would like to accomplish, me included! In the past, if you have derailed from your plan (I know I have over the years), what have you used to refocus? For me, it’s having an accountability partner (spouse, friend, executive coach, etc.), because I do not want to disappoint them or myself.

Keeping with the theme of creating and following your plan, I leave you with a simple, yet straightforward quote from Benjamin Franklin, “plan your work, work your plan.”

  • Craig Robson
  • Founding Principal and Managing Director

[1] AllianceBernstein, Capital Markets Outlook, Fourth Quarter 2020