People from all over the world have traveled to America to experience what is known as “The Beautiful Game.” Call it football or soccer, fans have journeyed far and wide to see and support their teams. Perhaps you have enjoyed watching the matches or videos of international guests experiencing the U.S. for the first time.
My Best Analogy
It’s a fitting time to share my best analogy for disciplined investing. When children first learn how to play soccer they often bunch up and chase after the ball, move out of position, and kick each other in the shins. This is what undisciplined investing can look like. Too many focus on one area of the market, flock to it, and unfortunately produce what we call market bubbles.
Professionals can make it look like a slower game because they know their roles and positions. When the ball gets to them, they know what to do with it. Some teams are built for a stronger defense. Other teams are built for a stronger offense. However the team is built, the players know their positions and aim to work as a team. That is what disciplined investing can look like. There is no guarantee the team will win, but we want to select quality players for our positions.
The Last 20 Years - The Ball (or Market) Moves
To further illustrate the point and provide greater perspective, here is research from MFS entitled “20 Years of the Best and Worst – A Case for Diversification.” It shows the performance of different sectors over the past twenty years. Some sectors performed better than others and no sector outperformed all the other sectors every year. This is why we carefully and thoughtfully select investments and strategies. The ball (or market) moves.
As you can see from the chart, we can’t know for certain where the market will go, and it would be foolish of us to think we could. Past performance does not guarantee future results, and diversification does not guarantee profit or protection from a loss. Our aim is to vet investments and design the portfolio to have a proper team in place and make adjustments when needed.
The First Half
Year to date the overall economy and markets have continued their growth trend. Company earnings have generally remained strong. Employment has been steady. Oil and energy prices have recently come down. Detractors of growth have been persistent inflation and geopolitical instability. Consumer and investor sentiment can change quickly, but we aim to avoid investing with emotion.
We will continue to monitor and evaluate any developments in the context of your financial and investment goals.
Visit sojournwealth.com/schedule to schedule an update by phone, virtually, or in person. I look forward to speaking with you then.
Sojourn well,
Sean M. Williams, CFP®