As we rounded the corner from December 2022 to January of this year, the war between Russia and Ukraine was heading into its second year with no end in sight. The COVID-19 pandemic was declared to be essentially over. There was much speculation (ongoing) about an incoming recession, as global banks raised interest rates to combat inflation. Here in the US, the Fed consistently raised rates to fight a runaway spike in prices.
In March, over the course of five days, we experienced the fall of Silicon Valley Bank followed by that of several other small to mid-sized banks. Outside the US, Credit Suisse was quickly acquired by a competitor, UBS, as governments and the global banking system came together to stem a financial collapse that would have had far-reaching consequences.
Back in the US, there was concern about the government’s seeming inability to reach an agreement on raising the debt ceiling. A last-minute deal was made and a potential crisis was averted. These were just some of the financial headlines, not to mention major geo-political conflicts and climate-related news that may have been on your mind. There is always something.
We bring these events to your attention not to focus on the “good” or the “bad” news, or the ongoing volatility in the markets, but rather to highlight that this is the reality in which we exist. All these events are what we — as investors — must take in as the backdrop of our journey toward our financial goals. Consider them the landscape through which we travel as we move forward. Will the road twist and wind? Yes. Will it be uphill or downhill at times? Yes. Will it be occasionally flat and without much of a view? Yes, it will. The road to one’s most cherished dreams is all these things. We appreciate the responsibility you entrust us with, to travel this road with you.
While we are here, allow me to remind you of a few of the most basic principles that lead to success in our work together. I can’t repeat them often enough.
You and I are long-term, goal-focused, planning-driven owners of broadly diversified portfolios of enduringly successful companies. As such, we act continuously on our plan, as opposed to reacting episodically to current events and conditions.
We're convinced that the economy cannot be consistently forecast, nor the market consistently timed. We infer from this that our best chance to capture something close to the full long-term return of equities is to ride out their frequent, sometimes significant, but historically always temporary declines.
These will continue to be the bedrock convictions that inform our investment policy, as we pursue your most cherished financial goals together.
It occurs to me that we don’t congratulate you enough for all you do to be here, to be reading this. If you’re reading this letter, it’s because you’ve made the courageous choice to follow your dreams; you stuck with your goals, you believed in your vision, and you care for what’s most important to you. Despite all the potentially devastating headlines I just listed above, you heeded our advice.
You listened. (May I also remind you that whatever came to pass, you survived it. You’re still here.)
I doubt any one of us (and I include you and me in “us”) was able to be exposed to all this news and remain unaffected by it. But what we did differently from so many other investors is that we didn’t act on the news. We may have been unsettled by it, but we didn’t allow it to take us off course. You didn’t let the news take you off course.
So … well done! Congratulations on doing what so many people cannot do and did not do. Congratulations on believing in yourself, and in your dreams, and for trusting our advice and guidance. Congratulations for not cashing out during the pandemic. Congratulations for not chasing Bitcoin. Congratulations for not falling for meme stocks. Congratulations for not listening to your neighbor, or relative, or that guy on TV. We can’t say it often enough: Congratulations on pursuing your destination despite the infinite opportunities you had to throw your hands in the air! You didn’t give up. Because this is your hard-earned money at stake, yet you listened and kept going, regardless of what happened in our world.
The world keeps moving forward and your portfolio and your plan keep moving forward — provided you stay on the road. We know how hard it is to stay committed. There are so many times one is prone to forget the destination, to succumb to fear, which is both completely understandable and perfectly human. It’s important to congratulate you on acknowledging your fear and then exercising the necessary discipline to achieve your long-term goals and objectives.
Our number one job is to be at your side in moments of doubt, of challenge, and of indecision. It’s like anything in life: when things are going well, it’s easy to be around. It doesn’t take much to stick with a winning team, or a rising market. But when life gets challenging, that’s the time to look around and take stock of yourself and the people surrounding you. Whatever your personal motivation is to entrust us with your most cherished dreams, we know that the most important role we play is in helping you stay the course. That is how we earn our fees. As important as our methodology of investing is to us and to you, the biggest way in which we impact your life is in reminding you of all the pitfalls of being a lifelong investor and helping you to steer clear of them.
Recently, I was speaking with a client. A client who is now also a friend. I wondered out loud how his money would have been invested, had we not met at the gym one day so many years ago. Would he be invested exclusively in equities? Would he have a plan in place? Would he be with another advisor, or would he have been able to manage his portfolio by himself? As a successful entrepreneur, he has a tremendously clear vision and is a highly disciplined individual especially when it comes to health and wellbeing. I guess it’s entirely possible that he could have done it on his own, and yet it’s well-documented that left to our own devices, left to our perfectly human tendencies, we will not, and we do not stick to a plan. The person who can outline their own plan, design a portfolio, and systematically maintain it for the rest of their life to reap the full premium of the market … does this person exist? That person is rare, indeed.
In fact, the reason you are reading this letter is because you know this better than anyone else. You know that you need help on this journey, or else you would never have asked for it in the first place. More importantly, you wouldn’t have asked us. And for that, we thank you.
As we enter the second half of this year, 2023, I ask you again the questions with which I opened this letter. What is happening in your life? What is happening in the world outside that has grabbed your attention? Maybe you need someone to share your dreams with, maybe you need someone who will listen to your concerns.
Whatever it is that you need to say, we are here to do our job. We are here to support you, encourage you, listen to you, cheer you on, guide you and help you move forward.
Thank you for the trust you place in us,
Ben Beck, CFP®
Chief Investment Officer & Managing Partner