My Confession Show 45

You may have heard before that “Confession is good for the soul.” Well, I have a confession. Historically, I’ve been a curmudgeon when it comes to holidays. It started sometime in adolescence.
The anticipation of Christmas annoyed me. It seemed like we began thinking about Christmas as soon as Halloween was over, and Thanksgiving could hardly be considered before we were on to Christmas.
Holidays tend to have obligation wrapped in them. Whether it’s buying gifts or sending fruitcakes or smiling for a dozen pictures, it’s one request after another. I know, I’m a curmudgeon! We’re pictured below on Easter this year.
Things have changed for me over the last few years. I know I spend a lot of time talking about my daughter, Amelia, but you’ll have to excuse me. When we had her, holidays became more enjoyable and I have loved the building of anticipation for a special day for her.
Last weekend was exhausting. We went to a Good Friday service, then to a giant Easter egg hunt Saturday morning, and then Sunday we went back to church, and then to Easter lunch with family. But all the while, we told Amelia what the next thing was and tried to begin teaching her about the significance of the holiday.
The best part for me was watching her come out of her room on Easter and see her Easter basket and what the Easter bunny had brought her.
The epiphany I had was when I was focused on how I felt, it soiled the holiday experience, but when you focus on helping someone else enjoy themselves, it becomes enjoyable for you and that other person.
That’s not to discredit our feelings about a situation, but it doesn’t really matter whether I like a holiday or not. That holiday is going to happen every year, whether I like it or not. Choosing how to approach the holiday is in my control. Amelia is pictured below after dying Easter eggs.
Dalbar is a large financial services market research firm and creates reports on investor behavior. For the last 27 years they have released a yearly study titled “Quantitative Analysis of Investor Behavior (QAIB).”
From the report, “QAIB has measured the effects of investor decisions to buy, sell, and switch into and out of mutual funds over short and long-term time frames. These effects are measured from the perspective of the investor and do not represent the performance of the investments themselves. The results consistently show that the average investor earns less in many cases, much less–than mutual fund performance reports would suggest.”
Much of the report was spent discussing the stock market correction that happened as a result of the Coronavirus. In the first quarter of 2020, the average investor lost -21.93%.
“In response to the to the market crash in March:
  • 30% of investors reallocated assets
  • 28% of investors invested more while prices were low
  • 26% of investors did nothing
  • 15% of investors cashed out”
Despite the Dow facing the its worst decline since Black Monday in 1987 the average investor did not panic. Flows out of equities during March 2020 were consistent with recent trends. The report states, “Few investors could have foreseen the unprecedented quick recovery, which took place in just 126 trading days.”
From the report, “In 2019, investors showed signs that the were skeptical of the current bull market, which was now 11 years old. That 11-year stretch from the lows of 2009 culminated with 31.5% gain in 2019. Despite the lingering bull market, investors chose to slightly decrease their exposure to equities, continuing a trend of gradual equity fund withdrawals which began in 2016.”
Congress in junction with the Federal Reserve responded quickly by buying bonds, equities, and dropping interest rates to the floor. Without interest rates being around zero percent, our economy would be in dire straits.
It’s unlikely that interest rates will be normalized any time soon. Also, the government is massively spending. We are coming close to $30 trillion of debt. The task for how to allocate your retirement savings has never been more challenging for the average retiree. Amelia is pictured below at her Easter egg hunt.
One last point from the report, “The average investor fails to realize the long-term benefits of asset ownership because they seldom stay invested in any given fund for a long enough period of time.”
The challenge with investing in retirement is how to allocate your assets. We know from Dalbar and other research that for stock market investments to work properly it requires a long time frame and patience. However, in retirement many people use their savings to supplement their income.
Working with a financial advisor to develop a custom allocation strategy for your needs may be beneficial. If you’d like to discuss this further call our office at 864.641.7955. I appreciate you reading!
Until next week,
David C. Treece,
Financial Advisor
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

Ready to Take The Next Step?

For more information about any of our products and services, schedule a meeting today or register to attend a seminar.

Or give us a call at 864.641.7955.