Working the Plan, Come Hell or High Water

Remember what we’ve gone through over the last six months:

1. On February 19th, the S&P 500 reached a new all-time high at 3,386.15.
2. Then COVID-19 fears hit the mainstream media and our collective consciousness, pushing stocks into a bear market within 16 days. That has never happened before.
3. The market continued to drop, reaching its low point so far on March 23rd – just 33 days from setting a new high. In total, (so far), it dropped 34%. Again, that had never happened before.
4. This decline was followed by the best 50 days the American stock market has ever had.
5. This was the deepest, fastest economic contraction in history with the sharpest spike in unemployment ever. Yet when the government’s official jobs report came out on June 5th it showed a gain of 2.5 million jobs when the consensus expectation was that it would show a loss of a further 7.5 million jobs.
6. Then on June 11th, the market dropped 6% in one day in reaction to the flareup in new virus cases as the economy began to reopen.

It’s been a dramatic time.

But the point I’d like to make is that, despite the fact that there are literally tens of thousands economists in this country and around the world, absolutely none of them predicted any, and especially not all, of the events above.

And yet the investment culture still listens to them, straining to divine some insight into the best course of action for the immediate future.

We’re like the ancient Greeks traveling to the oracles to know whether we should take this trip, or marry this person, or fight this war.

They don’t know the future any better than we do and why should they tell us even if they did.

They’re guessing.

The antidote to betting on someone’s ability to read the tea leaves and being forced to react to market events when that person inevitably gets it wrong is not to start looking for a new prognosticator.

It’s to build a plan and work that plan come hell or high water.

The best businesses don’t achieve that status by outguessing everyone else in their industry but by building a plan and working that plan through the ups and downs. The same is true for success as an investor.

Sure, you adjust the plan at times to pursue new opportunities as they arise or to eliminate a threat if you can. But while tactics may change as you go along, your long-term strategy shouldn’t. Nor should your long-term goals.

Just remember the goals you set for yourself all those years ago when you were first starting out. They probably haven’t changed except to get bigger as you leveled up your abilities and confidence.

We want to take the same approach in the rest of your financial life. Let’s set big goals.

Let’s work our tails off to achieve them. As life throws us curveballs, we’ll adjust our tactics but continue to pursue the things we really care about:

1. Building a portfolio outside your career that could provide you an income you can’t outlive, even if the worst were to happen.
2. Planning your portfolio and financial life to call your children and grandchildren up into a larger story, with greater opportunities and bigger challenges than you had.
3. Providing the best education and training possible for your children and grandchildren so they’re prepared to capture those opportunities and to take on those challenges.
4. Protecting your family in case something happens to you.
5. Freeing you up to pursue your mission in life through your businesses, hobbies, and other activities.
6. Providing you moments of key connection to your spouse and children to foster those relationships which give meaning to your efforts.

Over the very long term, I believe, each of us gets what we deserve. So, let’s focus our day-to-day lives on what we need to do to deserve the success (in our businesses, our careers, our marriages, our families, and yes, even our portfolios) we want.

We can’t deserve that kind of success by obsessing over what the world will throw at us next. We can deserve it by building a plan and working that plan day in and day out.

Keep the faith. Keep working the plan.