Thin(k) About Your 401(k) Plan: Reflections on 10 Years as An Advisor – Part 2
As I continue looking back over the last 10 years as an advisor at ThirtyNorth Investments, I realize that 2020 reflects a critical early lesson about discipline I like to share with clients and prospects. Recent conversations brought clarity to what I mean. With Covid-19 raising its ugly head again and the recent election, I have had people ask me whether or not they should stay in the market. Research shows that taking into account individual time horizons, staying invested is more likely to lead to success than trying to time the market by jumping in and out.
When Covid-19 first appeared, there were multiple clients like now who asked me if they should leave the market. One person got out and is now wondering when to get back in. The other person, after watching his account value fall in March and then recover over the ensuing months has thanked me for helping him decide to stay invested.
I have watched the market soar incredibly and also some very fast declining days. Other times, it seemed like we were going sideways for what felt like years. Anyone who tells you that they can predict consistently and with certainty what the market will do in the short-term isn’t being truthful.
What ThirtyNorth does is to look at economic conditions around the world and shift our globally diversified portfolios to lean into favorable conditions for certain asset classes when we think appropriate. Not taking large bets, rather tweaking allocations. Certain times favor growth stocks over value, and vice versa. Other times favor small cap stocks over large cap, though it hasn’t felt that way for a while. Nonetheless, we make sure our clients are invested in these asset classes at varying weights over the long-term.
At ThirtyNorth Investments, we help clients bring together money and meaning. We believe that our best chance to succeed in this mission is to understand each client’s ultimate goal for their money. That way, we can do our best to plot a course to reach that goal and help our clients avoid the temptation to bet large on the current “winner” being touted in the financial press. Or we help avoid the other big temptation to get in and out of the market in an attempt to only be invested during the good times. Both of these strategies are fraught with peril, which brings me to another of ThirtyNorth’s core principles.
Discipline is Everything – While many investing strategies and philosophies have merit, it is an investor’s ability to stick with a strategy that ultimately leads to success. Attempts to chase recent performance are generally unsuccessful and result in more trading costs and taxes. We believe that discipline and patience to follow a well-researched strategy rewards investors over the long-term.
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