Founding Principal & Managing Director, Craig Robson
In the first four weeks of the new year, I’ve had multiple conversations with individuals about the markets’ performance. The conversations keep having the same theme; nervousness, even though the markets are doing so well.
Person 1: “The markets can’t keep going up.” My response: “Actually, they can.”
Person 2: “It’s safer to stay in cash.” My response: “In my 27 years, I have yet to design a successful financial plan using current cash or money market yields as the primary asset class.”
Person 3: “I don’t have any specific data or examples, yet it doesn’t feel right.” My response: “Over the long term, markets react to fundamentals, rather than feelings.”
In sharing with you the examples of conversations, I am curious, do you have any nervous thoughts playing on repeat in your mind, as the markets perform well, but pandemic uncertainty lingers?
Ideally, the Federal Reserve would like to maintain a Goldilocks Economy; not too hot, not too cold, but just right. This steady state economy historically consists of low unemployment, asset price inflation (equities, bonds, real estate, etc.), low interest rates and low overall consumer inflation. I maintain, the FED has currently achieved this goal and the current economic environment is in play for future potential equity appreciation.
So, here is a question, why do people invest in riskier assets, as well as create a personalized financial plan? I believe taking these steps allows them the opportunity to achieve more in their one lifetime.
I offer this analogy, when you are using one of those navigation apps on your phone to get around town, do you click on the new suggested route to avoid traffic? What if the new route gets you there earlier than expected? You now have the opportunity to do more with your extra time.
In life, if your initial route becomes stalled, you course correct, so you don’t waste valuable time on your journey.
I will leave you with this quote from the famous writer, T.S. Eliot, “Only those who will risk going too far can possibly find out how far one can go.”
- Craig Robson
- Founding Principal and Managing Director