
Stan's World - Sharing Concerns
The other day, I saw the UPS truck stop at the end of my driveway, so I opened the door to receive whatever was about to be delivered. I casually asked the driver how he was doing, and he replied, “Not so well.” The conversation then led us to politics, politicians, and policies.
The driver told me he gets into almost daily arguments with his fellow drivers, mostly about politics. One driver told him that Russia was a great country and then yelled at him for being a communist. (NOTE 1: Russia is technically not a communist nation, so it appears that one can love Russia and hate communists. Apparently, there is at least one UPS driver in New Jersey who subscribes to those views.) The driver told me the arguments are tiring, and they’re wearing on him.
During the nearly 30 years that we’ve written this newsletter for our clients, we've made a concerted effort to avoid commenting on politics, politicians, or policies. (We also try to avoid topics related to sex, drugs, and alcohol, though I’ll admit I’ve been close to adding a few zingers here and there.) While we plan to follow those same rules for the next 30 years, we have observed that client anxiety has risen over the past few months, and that’s something we should acknowledge. (NOTE 2: If I’m still writing this newsletter in 30 years, be prepared for some very interesting content. Of course, 30 years from now, some of you may be ready for a few zingers!)
So, what have we heard from clients? Concerns about the stock market and what volatility might mean to portfolios. Inflation. Falling consumer sentiment. Tariffs and their potential impact on our spending. Exasperation about the growing split in this country between political parties and worries about where it might lead us.
Let’s be candid; there’s always something to worry about. Let’s go back to 2007, the year the S&P 500 began its 55% drop. (Yes, you read that number correctly.) I vividly recall fielding calls from frightened clients, as well as non-clients whose advisors wouldn’t answer their phones. The worry at the time was that the world was imploding, and that clients would never live long enough to recover their losses. (NOTE 3: They did.)
While there is certainly a lot going on that might cause you concern, I can’t reassure you by saying that we’ve been here before. However, I can argue that our economy is strong enough to withstand almost any pressure exerted upon it, including recession, high unemployment, and inflation. While I’m not implying that any of those might occur, I'm confident that the economy will respond and adjust over time.
When we prepare financial plans with our clients, we never assume trees will grow to the sky (e.g., the stock market won’t only go up). Our planning assumptions include volatility, encompassing markets that may decline over multiple years. If you’re currently retired and drawing funds from your portfolio, we’ve designed your portfolio to include low-volatility investments that can be sold without significant loss to cover years of spending. We’re sensitive to cash flow needs, and the portfolios we build reflect that concern.
I can’t tell you to avoid discussing politics with your family (though maybe you should), with your friends (though maybe you should), and at work (you definitely should). However, I can acknowledge the reasons behind market volatility and remind you that your portfolio is positioned for your specific needs.
While it’s easy to say that we shouldn’t worry about things we can’t control or events that are unlikely ever to occur, we all know it’s a lot harder to put that into practice. So let me end with the same sensitivity I showed my UPS driver when he finished telling me his tale: “I didn’t hear a lot of what you said because I left my hearing aids on the kitchen counter. Is that package for me?”
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