Our theme this week is one of my favorite topics (just ask Allyson) – control. We all succumb, at least in part, to the delusion that we are in control, self-directed and independent. The delusion of control is especially prevalent in investment management but permeates all aspects of personal finance.
Articles this week are more investment-centric than usual. My research (along with others) indicates markets are at a crossroad. While nobody can control what the stock market does, you can control how you respond. If there was a good time to examine your investment strategy relative to your beliefs, this would be it. More below .. but enjoy these reads.
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One Simple Way to Become 10x More Productive
How you value you time is how you value your life. “Pretend your time is worth $1,000/hr. Would you spend five hours doing extra work for free? Would you waste one on being angry?” ~ Niklas Göke (Medium)
Should You Ignore Financial TV (Pornography)
During the final quarter of 2018, the S&P 500 declined almost 14%. Just prior to 4Q 2018, the financial media was naturally (conveniently?) bullish as the market was peaking. (Retirement Field Guide)
Vanguard Cuts Expected Return for the Stock Market
The stock market won’t keep returning the kinds of gains investors have gotten used to since the bottom in 2009, Vanguard’s chief investment officer, Greg Davis, said. (CNBC)
Independent or Subject to Manipulation
Reality, as we perceive it, is an illusion. But, if you obtain the gift of special sight, you may see the world as it really is … or you can only believe you are in control. (Epsilon Theory)
Historical data suggests that Vanguard’s estimation of stock market returns over the next 10 years are very optimistic. Vanguard thinks stocks will only rise at a 4.5% rate over the next decade. The data suggests that number is really close to zero and possibly negative. By “historical,” we’re talking about the past 100+ years, not just a couple of decades of data.
I coach clients to focus on what they CAN control in their financial lives. You can control your cash flow (spending, saving and to some extent, income). You cannot control the stock market. However, you CAN control how your investment manager (or you) responds to what the market does. That’s a distinction that matters when markets are in a melt-down. But the time to examine that distinction is when everything “seems” fine.
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Yours in Wealth Health,