The Prudent Retiree - June 2016
“You can’t connect the dots looking forward; you can only connect them looking backwards.”
We all know Steve jobs, the visionary who guided Apple and developed so many products that make our lives easier. Jobs and Apple had rough patches but stayed with a plan. Now, he did not make this statement about investments, but the logic applies. We can’t see into the future. We can look backwards, connect the dots and see how being consistent can be beneficial to retirement.
The past year has been tough for investors. The market has behaved like a roller coaster. We don’t know what may happen going forward. Connecting the dots backwards, though, shows us that a focus on working to avoid large losses like occurred in 2008 is the foundation for a well prepared retirement plan. In the short run, events like BREXIT, a Presidential election and an indecisive Fed may cause extreme volatility and loss. In the long run, a prudent approach to risk management will keep you in the game.
From Steve Jobs to Lebron James. Many of you know that I grew up in Cleveland. I’ve been gone since 1979, but have always remained a passionate Cleveland sports fan. I went to all the games of the 1997 World Series. The Indians led going into the bottom of the 9th in the 7th game. They lost. That has been the story of Cleveland sports during my life. Until now. Lebron James and the Cleveland Cavaliers were down 3-1 to the defending champion Golden State Warriors. The consensus was series over. They forgot to tell James and the Cavs who made history by winning three straight games and the championship. As I screamed and cried in the backyard, my wife was worried the neighbors might call the police. A great thrill.
The point to this story is that you can be down temporarily, but still win by staying the course with a solid plan. Make adjustments, but stick with the plan. You can then look backwards and connect the dots.
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