Welcome, 2009

The year 2008 will be one that is hard to forget - at least that’s what many may be thinking now.  We have seen some dramatic events take place in the world of finance.  We have seen some companies get government “bail outs” while others have been left to go bankrupt.  Governments across the globe have joined together to make coordintaed financial decisions.  We have seen the worst employment numbers since the early 1970s.  Layoffs seem to keep coming as retail sales figures continue to be disappointing, housing starts continue to decline and foreclosures are at an all-time high.  On top of all that, US automakers are drowning in debt and are receiving money from the federal government in an effort to help them avoid bankruptcy.  The list of negative news - both financial and political - seems to be endless.

There is no doubt that 2008 was a difficult year for most Americans.  Very few went through it without being impacted, whether through deep negative returns, a decline in housing prices or a decline in business income, everyone was impacted.  This may seem obvious, but all of this has caused as much - if not more - damage to the psyche of investors as it has to their portfoios.  One of the phrases used quite frequently these days is “Confidence Crisis.”  While you are likely aware of our frustration and disdain for the promotions of the “crisis du jour,” we do beleive that there is definitely a crisis in confidence when it comes to investing. 

Questions abound as investors look for ways to not only grow their investments, but stop the seemingly endless onslaught of negative news which seems to send their portfolios dropping even lower.  The past has shown us that after the storm, the clouds will eventually part and the sun will shine again.  The same thing will happen in the financial markets.  There has been, and continues to be, a cleansing taking place in the financial markets, and if one thinks about the role of powerful storms in nature, there really is no difference.

Having faith to await the coming sunshine in the financial markets is what makes a good investor in these times.  Faith is why we invest.  Investors hold to a fundamental belief that an investment will increase in value over time, even if they do not completely understand how the marekts work.  Faith is the substance of things hoped for, but not yet seen.   As investors, we invest because we have faith in the future of the capital markets, regardless of the current situation.

“Fear has a greater grip on human actiona than does the impressive weight of historical evidence.” (Dr. Jeremy Siegal/Peter Bernstein, emphasis added)  The history of the capital markets has been turbulent.  And when the turbulence becomes strong, as it has been for the last 15 months or so, investors become fearful.  It is ironic, however, that the turbulence (risk) is how we are rewarded as investors.

Some have asked (or quietly wondered) why we have not changed our strategy because of the “historic conditions.”  The answer is simple: it does not make sense to make changes just because account values are decreasing, just as it does not make sense to change our strategy as the markets are increaseing in value.  Because all of our clients are long-term investors, we structure our portfolios to acquire the greatest amount of long-term compensatory factors, while not losing the power of diversification.

It is going to be interesting to see what transpires in 2009.  And while it was a very frustrating year for investors and business owners, we encourage you to take the advice laid out in The Station, an essay written by Robert J. Hastings:

Tucked away in our subconscious minds is an idyllic vision in which we see ourselves on a long journey that spans an entire continent.  We’re traveling by train and, from the windows, we drink in the passing scenes of cars on nearby highways, of children waving at crossings, of cattle grazing in distant pastures, of smoke pouring from power plants, of row upon row of cotton and corn and wheat, of flatlands and valleys, of city skylines and village halls.

But uppermost in our minds is our final destination–for at a certain hour and on a given day, our train will finally pull into the station with bells ringing, flags waving, and bands playing.  And once that day comes, so many wonderful dreams will come true.  So restlessly, we pace the aisles and count the miles, peering ahead, waiting, waiting, waiting for the station.

“Yes, when we reach the station, that will be it!” we promise ourselves.  “when we’re eighteen…win that promotion…put the last kid through college…buy that new Mercedes Benz…pay off the mortgage…have a nest egg for retirement.”

From that day on we will all live happily every after. Sooner or later, however, we must realize there is no station in this life, no one earthly place to arrive at once and for all.  The journey is the joy.  The station is an illusion—it constantly outdistances us.  Yesterday’s a memory, tomorrow’s a dream.  Yesterday belongs to history, tomorrow belongs to God.  Yesterday’s a fading sunset, tomorrow’s a faint sunrise. Only today is there light enough to love and live. So gently close the door on yesterday and throw the key away. It isn’t the burdens of today that drive men mad, but rather the regret over yesterday and the fear of tomorrow.“Relish the moment” is a good motto, especially when coupled with Psalm 118:24, “This is the day which the Lord hath made; we will rejoice and be glad in it.” So stop pacing the aisles and counting the miles.  Instead, swim more rivers, climb more mountains, kiss more babies, count more stars.  Laugh more and cry less.  Go barefoot oftener.  Eat more ice cream.  Ride more merry-go-rounds. Watch more sunsets.  Life must be lived as we go along.

Here is to a successful 2009 and going barefoot oftener!

To your success!

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