Most years, the stock market experiences volatility. This year has been no different. Throughout the news, we see that each day is a continuation of promoting the uncertainty of tomorrow. This year, the uncertainty has been surrounded by what will happen with tariffs and what the Federal Reserve System will do with interest rates.
These are valid concerns; however, this is nothing new. If this weren’t the focus, something else uncertain would grab the headlines. As a financial advisor, I need to understand these concerns, so I can speak to them when a client is fearful about what may happen next. Normally, my advice is to stay the course.
I played professional golf for a decade, and a healthy percentage of Lake Martin Living readers probably also play golf. Therefore, I enjoy using a golf analogy whenever it’s appropriate – such as now.
On the PGA Tour, a season for the typical player consists of around 30 events. Think of these 30 events as an investment time horizon. As this applies to life, think of these events as years. Throughout the typical season there will be highs and lows. A very successful season for most would be finishing in the top 30 on the FedEx Cup points list, making it to the Tour Championship at East Lake Golf Course.
In accomplishing this success, the PGA player may miss a few cuts and have a handful of finishes outside the top 30 in events. This same player will most likely win one, maybe two, tournaments and have several top-10 and top-15 finishes. What helps make this player successful is the process he sticks to, even after the bad weeks. Just because the PGA player misses a cut doesn’t mean it is time to overhaul his entire golf swing/game. The player knows this is part of the game.
Over the season, as long as the good outweighs the bad, and there is consistency, it will be considered a success most of the time. Consistency is what I always strived for when I played. This is what is known as boring golf. Going into the year, it is known that there will be some difficult weeks and that during a single day in the season there will be unknowns. This is an accepted and instrumental mindset that will improve the chances for success.
Investing is no different. An investing season – whether it’s 30 years, 20 years or 10 years – will be filled with ups and downs. The key is to partner with someone who has a consistent process to help you stay centered in the downs, so you can participate in the ups.
I love reading Warren Buffett because he does a fantastic job of staying centered. His thought process is simple: America and American business have been sensational. He believes that will continue. How better to participate than owning a piece of America through equities?
Oh yeah, and stay the course.
~ Lee Williams offers products and services through Nowlin and Associates. He also offers securities and investment advisory services through Ameritas Investment Corp. (Member FINRA/SIPC), which is not affiliated with Nowlin and Associates. Contact him at 334-703-3454.