…And that isn’t a typo! I like this better than the familiar phrase of “hindsight is 20-20”, which, when applied to the investment business, rarely works. I borrow this from a recent newsletter from Fund Evaluation Group, an investment consulting group. They asked their Chief Investment Officer (CIO), Michael A. Condon, to write an article about some of his experiences over the years. The resulting article is appropriately titled: A Veteran CIO: You Can’t Teach an Old Dog New Tricks.1
Mr. Condon recalls initially hearing this twist on the familiar quip from one of his former football coaches. I admit I have never heard this before. But its genius easily relates to another old dog in the investment business: me! The idea of 20-20 vision infers that looking back should give us perfect and exacting foresight into the future. How can this be? What is worth considering is the lesson that you either learn from your past or you repeat the same mistakes. It is a 50-50 proposition. Perhaps the old proverb credited to Mark Twain “history doesn’t repeat itself, but it does rhyme” is a little more relevant. We’re always hearing that investors today face challenges they have never had to face before. Really? Is that accurate? Is it indeed “different this time”? There always have and always will be difficult challenges as an investor. Numerous studies have shown the average equity and fixed income investor underperforms the broader market. Why is that? Many make the wrong decision at the wrong time. Many don’t adequately understand the benefits of diversification. They become too attached to a specific stock or industry. All decent explanations and I am sure there are many more. Even with the benefit of hindsight and experience, it still isn’t easy! So, on what lesson should we focus? These are in no particular order:
- Volatility is one of the prices you have to be willing to pay for higher expected returns.
- Patience is a virtue.
- Losing money feels worse than making money in the markets.
- To be a successful investor, you must be good at managing risk and your emotions.
- Market corrections are normal.
- Trying to beat the markets is a losing proposition.
Allowing the markets to work in their efficient manner over time should give us a better chance to be successful investors. Perhaps I would categorize them as having come from lessons learned!
As I approach my 30th anniversary in the investment business this year, this “older dog” has plenty more to learn. Having been around a long time doesn’t in itself mean much. Being able to learn from the past and not repeat the same mistakes is a challenge, no matter how long I have been doing this. What I can tell you is I am enjoying this business more now than ever before. Being a part of our clients’ lives and financial goals through all the ups and downs is very gratifying. Not always joyful. Life never is. It is up to us to find joy and be appreciative. And with that, I close with a final thought from Mr. Condon: “you can look backward and note what you ‘should’ have done differently, but there are an infinite number of variables that affect each outcome. Learn from your experiences, but always while facing forward.”
1 FEG Insight, “A Veteran CIO Share His Experiences: You Can’t Teach An Old Dog New Tricks”, Michael A. Condon. Fund Evaluation Group. March 2017.
The material in this publication is based on data sources we consider to be reliable, but it is not guaranteed as to accuracy and does not purport to be complete. The interpretation and organization of these ideas are the views of Kevin Welu and do not represent the opinions of TrueNorth Wealth Management. This information is not intended to be used as the primary basis of investment decisions nor because of particular individual client requirements, should it be construed as advice designed to meet the investment needs of one investor.
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The economic forecasts set forth in the presentation may not develop as predicted. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. No strategy assures success or protects against loss.
The Dow Jones Industrial Average Index is comprised of U.S.-listed stocks of companies that produce other (non-transportation and non-utility) goods and services.
The Dow Jones Global ex-U.S. includes equity securities with readily available prices that trade globally, excluding the U.S. The index is a subset of the Dow Jones Global Total Stock Market Index.
Lipper indexes are based on the 30 largest funds by asset size within the Lipper objective and do not include multiple share classes of similar funds.