Investment Advice in Troubling Times
This article written and provided by Thomas Wynn of Wynn Capital Management, LLC is a Santa Cruz, CA-based independent, fee-only fiduciary RIA founded in 2003 by former trader Thomas Wynn. A certified B Corp with ~$102M AUM, it offers financial planning and discretionary portfolio management—low-cost diversified ETFs, options-based income strategies—for individuals, families, and trusts.
The US financial markets are at all-time highs, and so is investor anxiety. Let’s take a look at the data, see where we stand and try to understand the disconnect between prices and the overall mood of investors.
If you look at the chart below of long term returns for seven types of investments as of the end of the 2nd quarter, you’ll see that every arrow, for every period, is up.
Despite these incredible returns that started in 2009, there is massive anxiety about the future. There are lots of reasons. Here’s my very short list:
The benefits and potential dangers of AI are a huge unknown.
The administration’s unpredictable and chaotic economic and foreign policy has companies, countries and investors on edge.
Interest rates, while low historically, are rising.
The US budget deficit.
Social media as our main source of information has splintered and distorted our collective view of reality.
“The market climbs a wall of worry” is a common phrase among advisors and economists. As the “Stay Calm” book I reference below recommends, successful investors understand and embrace the uncertainty of the market, and life.
Some of us, through nature and nurture, gravitate toward this balance of accepting the unpredictability of the present and the risk and volatility that has historically rewarded long term investors. Many of us, not so much.
Though boring and seemingly trite, the “Relentless Rules of Humble Arithmetic” (Louis Brandeis) still rule the day. A few of the “Humble Rules”:
Build a globally diversified investment plan that evolves as you pass through the stages of building, protecting and preserving your wealth.
Combine that with financial and retirement planning.
Make sure your investment expenses are known and low. Become familiar with “expense ratios.”
Defer and reduce taxes as much as possible.
Ask for help if the project of organizing your investments and retirement plan seem overwhelming.
The markets have endured as a source of wealth despite two world wars, recessions, depressions, bubbles and the constantly accelerating rate of change. The uncertainty, risk, volatility and periodic declines are the price of receiving returns that are higher than a money market and build wealth over time.
If you have any questions, you’re welcome to reach out to me any time. My phone is 831-588-7178 and email is twynn@wynncapital.com
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