The
ideal portfolio
It took less than three
months of pandemic to bring everyone's expectations about what constitutes an “ideal”
portfolio to a devastating halt. I
know this because I spend the preponderance of my time strategizing about how
to match my client's expectations about their money with the realities that
exist in the data. But data and
statistics cannot accurately portray the human anguish wrought by disease,
fear, and economic instability. In good
times it is quite the herculean task to conjoin those concepts. Now, it is next to impossible.
We must accept that the
shock of being knocked off balance, out of sync with our imagined plan, drains
all the energy we have and makes it difficult to focus on tomorrow.
It is time to brace for
the inevitable bad news about the future.
The recovery...financial, medical, social, and psychological...will be
arduous with the very real possibility that things will get worse before they
get better.
More noteworthy,
however, is that the trauma of pandemic is affecting the global economy in ways
which continue to magnify the inequities of money itself, far more so than we
had understood before the crisis. Those
in danger of falling through the social safety net are now literally teetering
on the edge of ruin; the wealthy are worried about not having their money run
out. Across all layers of the economic
hierarchy the crisis is hitting with a vengeance, but with degrees of severity
that expose the wealth gap like never before.
Well paid persons at
the top of the scale can afford to worry about tele-working, discretionary
dining choices, or which country home they will retreat to this summer. At the bottom of the range, lower paid
employees are hit mercilessly with food bills, medical expenses, commutation
and health costs and concerns, and education for their children. Finally, the truly indigent are left with no
choices but to survive or perish.
The
trademark of this epidemic is the indelible image of food lines, makeshift
morgues, and overworked healthcare providers. Their pain...our pain...is not likely to
abate overnight, or to recover like a “rocket ship”.
Defining
value
So what constitutes a
proper investment response at this moment?
The answer depends upon the actual topic we are discussing and the
capacity we have for imagining something different. For almost every situation, including
building wealth, there is always an aptitude to solve problems if we can recognize
that the most critical element to solving a dilemma is how we use time. The
source of most mistakes and misery is our impatience over getting things done
immediately.
“Why
aren't we bottom-fishing for low(er) price stocks right now?” “How much cash do we really need to hold on
the sidelines?” “Can't we be doing
more?” “Is doing nothing really doing
anything?”
Imagine my phone calls...and imagine you
making them!
Let us remember that
any “ideal” is a constantly changing item.
To strive for the ideal is one thing; to achieve it , quite
another. Expectations, as noted above,
do not often meld well with the realities of one's circumstance. We become our own worst enemy when consumed
by “what should” rather than “what is”.
“Just get it done. Do it now!!”
One problem with that
is that the goal line for perfection is constantly moving...and virtually never
attainable. The best one can do is to
mitigate absolute financial tragedy by relying upon facts, process, and
empathy. There will be opportunities for
investment in infrastructure, ecology, healthcare and biotech, water, food,
education, finance, and energy which help contribute to the future welfare of
mankind. But leaping in amongst the
sharks at this highly volatile and uncertain juncture without a plan is highly
unadvisable. Our "worth" is
not in the preservation of yesterday's ideal, but in the ability to demand more
of ourselves in the future.
One's highest
aspiration for building wealth should not focus upon the Dow Jones or the
national GDP but upon the dignity of work and an open access to capital that certifies
opportunity and respect
as the entry criteria for
participation.
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