Time horizon is such a critical concept to understand and accept in investment management.
Technology is improving our standard of living tremendously but it is also making us an "instant" society. We want 24/7 information and answers right now. We want to know. We want it to happen now.
As one journalist recently wrote, "We may not know better these days, but we do know more." I'm not sure we do know more, but .....
... we are becoming a less patient society. Two other clichés come to mind: "The more we know, the more we realize we don't know" and the top cliché of the moment, "No one really knows how bad things will get."
There are two things that I do know. First, pessimism is extremely high right now. (Documented by the fact that the Conference Board Consumer Confidence Index registered its lowest reading in February 2009 since the index was started in 1967.) Second, the current losses in the stock market are not permanent. We will have a recovery. When and how fast, we do not know. U.S. Federal Reserve Chairman Ben Bernanke recently said that the recession should end this year and 2010 "will be a year of recovery." He further stated that an "adverse feedback loop," in which economic and financial strains become self-reinforcing, must be broken. We need to restore optimism.
So the big questions are how bad will it get, when will it recover and how fast will it recover? All of our clients have, at a minimum, a 10 year or 20 year life expectancy and investment time horizon and many have 30 year or 40 year or longer life expectancy and investment time horizon. That seems like an eternity. But I guarantee you we will know the answers within your respective time horizon! More realistically, we will know within 3 to 5 years, maybe even within one year, but not today or tomorrow. Patience is a virtue.
Our communication with you is more important than ever during this time. We are proud to report that our "A Look Back at Late 2008: Monday Morning Armchair Quarterback Review" two-page piece on the S&P 500 volatility was selected as one of the most creative and effective by Bob Veres, a nationally recognized and highly respected writer in the financial planning industry, from among over 150 firms in the country.
As always, your trust and confidence are important to us and we appreciate the opportunity to serve you! Please contact us with any questions you have.
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