Bringing the Evidence Home

So…a buddy comes in.  First, we chatted about being big losers in the billion-dollar Powerball Lottery.  Then, for some reason, we begin chatting about interesting stuff we’ve been reading lately.  Our buddy had been reading a short story that was a bit of a ‘parable’.

It went like this – a King had a boulder placed on a Roadway.  Then he hid himself and watched to see if anyone would remove the huge rock.  Some of the King’s’ wealthiest merchants and courtiers came by and simply walked around it.  Many loudly blamed the King for not keeping the roads clear, but none did anything about getting the stone out of the way.  Then, a peasant came along carrying a load of vegetables.  Upon approaching the boulder, the peasant laid down his burden and tried to move the stone to the side of the road.  After much pushing and straining, he finally succeeded. After the peasant picked up his load of vegetables, he noticed a purse lying in the road where the boulder had been. The purse contained many gold coins and a note from the King indicating that the gold was for the person who removed the boulder from the roadway.

The peasant learned a valuable lesson  – OBSTACLES PRESENT OPPORTUNITIES!

When it comes to managing wealth, there will be many ‘Obstacles’ in our paths.  After we take care of efficient taxation, estate planning, risk management and charitable giving, we find ourselves confronting the 800-Pound Gorilla in the room – Accumulating Sufficient Liquid Net Worth Such That Work Is Optional!

Accumulating sufficient liquid net worth sounds simple.  Have a long-term investment plan, start saving early in life and continue to save.  The ‘Obstacles’ to this simplicity are many and uniquely personal – the Executive Summary is that ‘Events Get In The Way Of  Saving’ and ‘Events Cause Us To Second Guess Our Planning’.

Events In The Way Of Our Saving Include:  We get ‘The Wants’ and over-spend.  We have families that are, face it, priceless/expensive.  Then  there is the litany of cars breaking down, litigation, emergencies, etc.  It’s not unusual for an ‘Obstacle’ to disrupt a saving plan.

Events Causing Us To Second Guess Our Plan Include: the Financial Press tells us that ‘The Sky Is Falling’ or ‘The Train Is Leaving The Station’.  Let’s face it – it is emotionally nerve-wracking to listen to the relentless noise and stick to a Purposeful Plan.

Later in life, if we’ve been fortunate and disciplined enough to Make Work Optional, it may be disturbing to sit on a big pile of low return less risky assets when the financial press is ‘Advising’ that ‘Markets Are About To Go Straight Up’…’The Train Is Leaving The Station’ .

It can be likewise difficult, in spite of having Made Work Optional to have a purposeful portion of your liquid net worth in high return more risky assets when the financial press is ‘Advising’ that ‘Markets Are About To Collapse And Go Straight Down Forever’‘The Sky Is Falling’.

We observe first-hand the human behavior of questioning decisions and the emotional anguish that market volatility creates every single trading day.  Why didn’t I have more or less stocks or more or less bonds this morning?  It’s apparent every single evening after the market closes that we each wish we had been more overly concentrated one direction or the other.

That said, the diversification between Risky Assets and Less Risky Assets is Purposeful and, in my view, needs to be embraced and in place without regard to current market volatility.

To say it another way, absent clairvoyance, the only solution is to Have A Purposeful Plan.

With our clients, we work to have a Purposeful Plan in place.  Future ‘Currency Need’ is at the heart of our planning.  We are able to measure progress toward goal achievement and we are able to objectively assess ‘Are Stocks & Bonds Performing Within The Bounds Of Expectations?’  This is a useful exercise when the ‘Is It Really Different This Time’ question rears its ugly head – without regard to whether ‘The Train Is Leaving The Station’ or ‘The Sky Is Falling’.

If the market activity of January 2016 has manifested within you with an emotional ‘Obstacle’ – please give us a call.  We would love to host you for a Working Lunch and objectively determine and plan for the likelihood of you Making Work Optional and/or Keeping Work Optional.

The purse of gold coins opportunity beneath the omnipresent obstacle of market volatility may be the prospect of embracing emotional tranquility by knowing ‘You Are On Track To Goal Achievement’ and ‘You May Have Things To Worry About But Your Currency Needs Are Not A Concern’!  In my view – Emotional Tranquility is a good thing and worth embracing!

To see the daily distribution of US Large Cap market returns–opportunity behind obstacles–please click here: US Large Cap Market Returns

Trusting this will find you – and my buddy the well-read billion-dollar Powerball loser – enjoying the opportunities that lie beneath life’s obstacles, we remain

Yours Truly,

Warburton Capital Management



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