It’s the end of June which means it’s the end of the school year, and graduation season. Every night my Facebook feed is fresh with new pictures of friends’ children who just graduated. While those abroad wearing their caps and gowns take a more formal approach to the ceremony, here among the males it’s skinny jeans and shoes and sandals with no socks.
On a personal note we actually are celebrating the graduation of our two sons. Our older son finished high school and our younger son finished 6th grade. This brings mixed emotions. On the one hand it means all of our children are getting older and getting closer to heading out to make their own way in the world which is exciting and the other hand it means that all of our children are getting older and getting closer to heading out to make their own way in the world which is sad in some respects.
One advantage of having older children at this time of year, is no longer having to attend the Mesibat Siyum, the end of year pageant. Earlier in the week I happened to be parked across from a park where the pageant was taking place. My back started hurting just thinking about having to squeeze my adult body into a chair meant for a 4-5 year old for 2 hours. Boy was I happy to be able to listen to one of their songs and then drive off!
Money
I know that I speak for my wife as well when I say how proud I am of our 2 graduates. Especially our high schooler. We know it wasn’t always easy, especially with corona, but you really plugged away and have really matured these past few years and we wish you much success as you start adulthood.
Don’t worry, that is about as emotional as I ever get! What do the end of the school year and graduations have to do with your money? The answer is quite simple. Investors need to focus on the long-term. Just like when raising kids we may be nervous in the short-term, and not overjoyed when a child brings home a 45 on some history test, but if we take a slightly longer view we realize that whether or not the child gets the 45, it’s pretty irrelevant to adulthood.
I heard a great story earlier this week while I was in a meeting. It’s was about a boy who had severe ADHD. He was a disaster in high school, but when he got to the army he flourished and became an officer in an elite IDF unit. After finishing his service he decided to go to university. He met an old teacher of his and he told him that he was an officer and that now he is starting university. The teacher was amazed at his army experience, but even more by the fact that he was going to university.
He said he was going to run and tell his current high school class this story, as inspiration! Investing is similar. Don’t get caught up in short-term market movements and get scared if the market drops 7%. I may sound like a broken record but markets have corrections frequently and it’s the investor that doesn’t get all nervous and panic that makes money and builds wealth over time.
A few years ago Mark Hulbert wrote, “If you think you will know it when this bull market finally comes to an end, you are kidding yourself. The vast majority of professional advisers who try to get in and out of the stock market at the right time end up doing worse than those who simply buy and hold through bull and bear markets alike. Even those few who beat a buy-and-hold strategy during one period rarely beat it in the next one.”
If professional investors are lousy at timing the market why would individual investors think they can do better? Recently I have received calls from clients worried about a stock market crash. My response to them is that 1- markets rarely crash and I wouldn’t be too worried about it and 2- if they are worried about it, it means that have an incorrect asset-allocation. It means that they have too much exposure to the stock market. If you can’t afford short-term losses in your stock portfolio, you need a more conservative approach.
Speak with your financial advisor to make sure that your portfolio is in line with your short and long-term goals and needs, and make sure that it is allocated correctly to achieve those goals.
Mazel tov to all the graduates!
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com