By Warburton Capital | August 26, 2015 | 0 Comment
…exclaimed my 13-year-old after his zip line adventure high above Estes Park, Colorado last month. The ride started with my two sons climbing a 40 foot tower at the top of the mountain and jumping off to zip line 800 feet over a valley and arrive safely at the other side. After running back over to ride it again, he asked “Dad… aren’t you going to do it?”
I realized that the experiences of my sons and I mirrored many of our clients in this “up and down” market. Younger clients often “enjoy the ride” and are invested in a well-diversified stock portfolio, because they know that they have time on their side. However, many of our more “seasoned” clients are happy to watch this crazy market with their feet planted firmly on the ground, with a more stable diversified portfolio of bonds with less exposure to stocks, which can be more volatile.
The events of the past month and especially last week and this week could not be predicted – no matter what the financial press says in hindsight! I am amused that at the end of the day the talking heads wax on about the signs that led up to a 3% drop in one day like it was an obvious foregone conclusion.
We even saw a Facebook post on a friend’s wall that said that “now is the time for active management! Make your money manager earn their management fees!”
It remains our view that the only things that we can control with regards to the stock market and inside a portfolio are: reduced expenses, a diversified portfolio, minimizing taxes, and the discipline to stay the course with PURPOSEFUL PLANNING.
I am reminded of a quote by a Nobel Laureate in Economics;
“A good portfolio is more than a long list of good stocks and good bonds. It is a balanced whole, providing the investors with protections and opportunities with respect to a wide range of contingencies.”
Professor Harry M. Markowitz
No two portfolios are the same, because no two people are the same; we all have different Goals, Values, Resources, and Obligations. What should be the same for all is the process of building a Purposeful Wealth Management Plan, and sticking to it. There will always be the “opportunity” to ride the zip line – and it might be fun! – but it might not be the experience everyone is looking for.
It was a great trip – and a great adventure for my sons – but I was happy to watch them with my feet planted safely on the ground with the other parents. I was happy that everything turned out alright and even more happy that my sons took the risk and enjoyed the rewards.
Mark R. Morley, CFP®
Warburton Capital Management
Registered Investment Advisor