2023 might very well become a case study that examined for years by behavioral finance.
I can’t help but think back to this time a year ago, may be an incredible understatement, but pessimism was high.
Q: Did you hear there would be a recession in 2023?
Q: Did you hear that the stock market would struggle this year?
Yes, me too!
Here are a couple of interesting notes we can take away from this year:
Over the past year, many within financial media have discussed the merits of lower-risk investments such as money market funds or Treasury Bills.
The siren song of “safety” historically presents itself near peak pessimism.
Ironically, peak pessimism is historically the best time to buy stocks (not money market funds, T-Bills, I-Bonds, etc).
Ironically, the S&P 500® is up approximately 20% for the year.
Always Keep This in Mind
Even if we were lucky enough to know all relevant future economic and financial data points: inflation, interest rates, corporate earnings, job/unemployment reports, etc…
We’d still have NO IDEA how the markets would react.
The point is that we don’t try to predict or time the future based on the data. Regardless of the data, we work hard to plan and prepare for the future.
The Answer Key
We believe the path to a successful financial future at Know My Plan is continuously acting upon a written financial plan.
Financial planning is an ongoing process, like exercise with a balanced diet. No one finds optimum health after a single workout or healthy meal.
The results show themselves by consistently doing the right things over decades, not days.
For many reading this note, this message is familiar. For others, this may be a framework you’re hearing for the first time.
If you or someone you’re close to could use help aligning their finances and establishing a financial plan, please reach out to us, we’re accepting new clients and eager to help.
Cheers,
Nic
Disclosure: The Standard & Poor’s Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
