The Investment Coach

Country artist and songwriter Brad Paisley said, “If you make the mistake of looking back too much, you aren't focused enough on the road in front of you.”

In financial life planning the focus is on your future—where you are now and where you want to go.

Going deeper, it’s useful for you, for those you love and care for, those who care for you, and those who depend on you, to know “why” you want to go there. When it comes to successful life transitions of all kinds during your life’s journey, “purpose” is the new currency. Yet, looking back is useful if we learn from the past. Respecting and understanding the past is enshrined in national holidays like Independence Day, Memorial Day, Thanksgiving, or religious observances like Christmas, Easter, Hanukkah, Passover. We use such holidays to reflect on meaning and purpose and our role in the world around us.

History, “reading the minutes of the last meeting,” is important. Too many, politicians especially, fail to do that. Spanish philosopher George Santayana famously warned, “Those who do not remember the past are condemned to repeat it.” The late Uruguayan journalist Eduardo Galeano, reminded us that history isn’t dead, declaring, “History never really says goodbye. History says, 'See you later.’”

Every year 0n Sept. 11 we look back at the tragedy and lessons of 9/11. Economic journalists recently recounted the 2008 “too big to fail” bankruptcy of Wall Street behemoth Lehman Brothers. A rolling economic collapse tanked the stock market along with a deep recession, people losing jobs and homes, widespread business failures, jarring reminders of what “risk” can entail. That experience still influences investor behavior.

The percentage of American households owning stocks or mutual funds declined from 30 percent in 2007, before the crash, to 24 percent in 2016. Many who now worry about funding retirement missed out on the long running stock market recovery and the astounding run up in stock prices, especially in the last two years.

The lessons of history tell us that there is always something that can interrupt a trend, disrupt the status quo, kill “we’ve always done it that way.” In today’s technology- and idea-driven world, disruption is the game. We humans hate disruption as it invades our comfort zone.

The unknown philosopher, Anon, said, “A comfort zone is a beautiful place, but nothing ever grows there.” No matter how old you are, life consists of a series of transitions, many of which can be a surprise, forced, not of your choosing, but potentially precipitating reinvention and rejuvenation.

In all undertakings, you must have a contingency plan, a strategy for dealing with risks. In investing, we know stock market valuations are high. Interest rates are rising. The dollar strong. Emerging economies like Turkey and Argentina have seen their currency tank against the American dollar as borrowers struggle to repay debts denominated in dollars. In the U.S. lower rated debt has ballooned and “shadow lenders” outside of the banking system are assuming more risk. Risk is in the weeds and a bear in the woods, somewhere. When, how, and why the next bear market will emerge is anyone’s guess. Whether you are a lender, borrower, equity investor, business owner, CEO, entrepreneur, retiree, student, employee, or cocooning in your comfort zone, you must have a Plan B, a continuity plan, contingency plan, a strategy to survive the next bout of “whatever.”

Better yet, do you have a plan to capitalize on the next transition, whether it impacts you, your family, job or career, company, investment portfolio? Hardship and challenge are mothers of invention. Personal life transitions often are messy, confusing, frustrating.

As you move away from where you were to “what’s next,” you may have too many options, too many people telling you what to do, too many diverse opinions. That’s what an outside “thinking partner” is for.

Given your challenges, what are your best alternatives? What resources, financial and human capital resources, can be mobilized to power alternatives? What do you want to happen, experience? What’s your plan for the next ten years? The good news, much of what you worry about won’t happen. The bad news? Something else will. You just don’t know what it is.

Karl Marx said, “History repeats itself, first as tragedy, second as farce.” You can survive a tragedy if you are perceptive and prepared. Too bad the followers of Karl Marx didn’t dig deeper, propagating as they did some of the greatest tragedies in the history of mankind. A farce may be funny if you aren’t the butt of the joke.

The Roman philosopher Seneca offered, “Luck is what happens when preparation meets opportunity.” Well said.

Lewis Walker, CFP®, is a financial life planning strategist at Capital Insight Group; 770-441-2603. Securities and advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative and investment adviser representative of SFA which otherwise is unaffiliated with Capital Insight Group. He is a Gallup Certified Strengths Coach and a Certified Exit Planning Advisor (CEPA®).

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