Market Updates
In the final days of 2022, Congress passed a new set of retirement rules designed to facilitate contribution to retirement plans and access to those funds earmarked for retirement. The law is called SECURE 2.0, and it is a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act passed in 2019. The sweeping legislation has dozens of significant provisions; here are the major provisions of the new law.
When describing our investment process to new or prospective clients, we emphasize that we work very hard to control those variables that we can – at least partially – control: expenses, tax efficiency, and managing volatility. Unfortunately, there are many things we cannot control like market performance, geopolitical events, and monetary policy. Often, it can feel as if these “uncontrollables” outweigh the importance of controlling what we can. In practice though, periods like we are in now are especially important to stay focused on our process.
The market sell-off of the past few weeks, sparked mainly by the Corona Virus, has tested the most disciplined of investors’ resolve to stay the course. We have been following the latest developments about the Virus to ensure we are doing our part to ensure the safety of our clients and employees. Of course, we are also monitoring market response to this Black Swan event to ensure our strategies continue to make sense. Rather than trying to rehash news reports or offer some novel advice about the Virus, instead we thought it useful to put the current environment in perspective.
In the 1993 comedy starring Bill Murray, a weatherman finds himself living inexplicably the same day over and over and over again. As we make our regular calls to clients, we feel like we are delivering the same message over and over “The markets remain in the same range they have been in for most of the last 2 years. When S&P gets to the upper end of the range it finds a reason to sell off and when it sells off for a week or two it tends to rally right back. The market and economy continue trade off focusing on the strong (albeit slowing) domestic economy vs the uncertainties of the trade war and political environment we are in.” For most of the past year we could put this message on repeat and play it each month for our client calls.
The biggest challenge for long-term investors is seeing past short-term market noise. This was summed up best by Benjamin Graham who said, “in the short run, the market is a voting machine but in the long run, it is a weighing machine.” There are always issues that could affect markets, especially in the near-term, and this is reflected in knee-jerk investor reactions. However, only a few events of actual substance will drive markets in the long run.
As many of you know, both Steve & I have been coaches at all levels from college to T-ball. One of the great things about sports is how they can be used to teach meaningful life lessons; and, if you get the lesson wrong, the downside might be only a loss to another little league team, not the end of the world. We thought we would use this newsletter to apply some of the lessons we use in coaching to help explain some of our investment philosophies.
