An exceptional quarter century came to a close
Most investors today in mid-career or nearing retirement age have prospered in what I would term a secular, multi-asset, mega-bull market – a multi-year period of above average returns in several asset classes primarily at the same time. During this time, investment management did not necessarily require the same discipline as in later years.
It is often useful to review bull and bear market cycles in retrospect, because the full extent of the extremes are revealed. Looking back on the previous bull market cycle, the 25-year period from 1982 to 2007 was arguably the single best quarter century ever enjoyed by U.S. investors. Bonds were in a bull market that extended throughout this whole period. Stocks were in a secular (long-term) bull market from 1982 to 2000. There was one memorable decline in 1987, when the market suffered its largest one-day drop in history (22.6 percent). But that “Black Monday” proved to be a mere hiccup in the Dow’s climb from a value of just over 800 in 1982 to 11,722 in January 2000.
Lessons in Financial Strength
“A financially strong investor is a superior investor.” This observation, distilled from my 25 years in the field of wealth management, is simple and yet so profoundly true, I decided to make it the motto of my company. All too many investors learned this truth the hard way during the recent financial crisis: You do not become financially strong by achieving superior results; you achieve superior results by becoming financially strong.
Early in life, my family drove home the importance of strength. My family didn’t buy the home we lived in, we built it. My brothers and I helped my father pound in the nails that held the frame of the house together, and you can bet we didn’t just walk away from boards or joists that still felt rickety. My father built nuclear power plants and oil refineries, structures that must be built to last and able to weather hurricanes and earthquakes. His duties gave him a “stronger is better” way of looking at life, which rubbed off on me.
An Ill-Advised Investment
In 1929 Winston Churchill, the future British Prime Minister, was touring the United States and Canada. Churchill had just stepped down as Chancellor of the Exchequer, a high government post equivalent to the Treasury Secretary in the U.S. Freed from his duty of overseeing financial policy for the British Empire, Churchill had time to focus on his personal wealth management and investments. In a letter to his wife, Clementine, dated September 19, he boasted of his success in this new pursuit:
Investors instinctually get on and off the train at the wrong time
There is a common assumption that average market performance and average investor performance are roughly synonymous. If the market has a good five-year run, investors have a good run. If the market is down over five years, investors, on average, lose money. However, since the market almost always goes up in the long run, a patient and diversified investor should get solid long-term results, right? That is what most believe.
The problem is that investors, on average, do not succeed in taking advantage of long-term trends. They do not approach the market in an entirely rational, wholly prudent way. Great market news excites people and spurs them to buy when prices are high. Sharp drops and prolonged downturns discourage or frighten people into pulling back and liquidating assets.
My favorite productivity coach of all time is David Allen, famed author of Getting Things Done.
When you first work with David’s concepts and materials, you think it is all about optimal levels of productivity…but you soon realize his methods also have a wonderful way of unleashing you from all the complexity and worry that often accompanies high levels of achievement.
In one of his audio recordings, he says: “Too controlled is out of control” and this immediately resonated with me. Actually, it articulated the “sweet spot” I have always aimed for as I created (and ultimately patented) Systems and Methods for Optimizing Wealth and most all of the other wealth and investment management systems, structures, support and tools I’ve created over the years. I always have heard that you can have a form of “unconscious competence” that serves you, but you can typically build upon it at an even higher level when you become aware of it and it becomes “conscious competence” – this was the case for me with this concept.
Whether you are seeking to better invest your money or seeking to be a better “depletion-resistant” wealth steward, my advice is to keep the “too controlled is out of control” insight in mind. Here are some tips:
Janiczek Wealth Management is proud to sponsor an Expert Panel on Life-Changing Liquidity Events. Experts from EKS&H, Minor & Brown, The Forbes MA Group, Business Enterprise Institute (BEI), Denargo Capital and Janiczek Wealth Management convened to share stories and best practice tips on creating “the perfect exit.”
The panel includes Joanne Baginski, CPA (partner EKS&H); Lisa D’Ambrosia, Director/Shareholder, Minor & Brown; Bob Forbes, President/Founder, The Forbes M+A Group; Joseph J. Janiczek, Founder/CEO, Janiczek Wealth Management; John Brown, Founder of Business Enterprise Institute; and Pal Berg, Co-owner of Denargo Capital. Kumar Dandavanti, Founder, Dandavanti Group is on the expert team but was excused due to overseas travel. Check out great video snippets, quotes, tips, article and an infographic at: www.janiczek.com/expert-panel/. Also includes resources from the Selling Your Business – How to Create the Perfect Exit event several of the Expert Team panel members put on in conjunction with the Denver Business Journal.
Janiczek Wealth Management has been named one of the Top 12 Financial Advisors in Denver, Colorado Springs, and Boulder (Colorado) by AdvisoryHQ. To read the full article/review “Janiczek Wealth Management – A Beacon of Light for High-Net-Worth Individuals” go to this link.
Now in our 25th-year serving high net worth investors (those with investment portfolios of $2- to $20-million) and ultra-high net worth investors (those with $20-million+ investment portfolios) in the Denver, Colorado Springs, Boulder, Aspen, Vail, Beaver Creek, Summit County and Snowmass areas of Colorado and in approximately 24 other States in the U.S.A., we our proud that our patented Strength Based Wealth Management (SBWM) and our comprehensive Evidence Based Investing (EBI) services helps to “unleash” our clients from the complexities of wealth and investing so they can flourish with their good fortune.
It’s been an annual tradition of mine to put something special together to share with clients and friends for the new year. This year, the theme is “The Big Breakthrough” and it includes three powerful tools for mastering time, focus and wealth. Watch the video presentation and download the companion worksheets below:
I was challenged by a friend to put together a compilation of the most powerful tools young and middle-aged adults (those in 20’s, 30’s & 40’s) could utilize to gain maximum traction in their careers, wealth creation efforts and mastery of wealth. The presentation went so well, I decided to go in the recording studio and create a version clients and friends could share with their adult kids, nieces, nephews, grandkids and so on.
So here it is…the Big Financial Breakthrough Video and Worksheets. Click to watch the video and download the worksheets…you are moments away from taking your wealth creation and mastery to an exciting new level.
We are all touched by terror. Our response can be to give into it (live in fear, live in hate, etc.) or lever off of it with unquenchable courage and love. Here is a link to a beautiful tribute by Antoine Leiris to his wife Helene, one of the victims in the Bataclan theatre attack in Paris:
As we approach Thanksgiving and Christmas, our heart and prayers are that we all can respond to any setbacks or evil in such a loving and courageous way.