Don’t Pay Attention to the Weather

Last week a client said he knows we pay attention to the climate and not the weather, but he still wanted our take on what he should do with his investment portfolio right now. It’s a great line “pay attention to the climate and not the weather.” And it’s true. We don’t much care if it’s raining, sunny, snowy, windy, or cloudy and neither should you.

To torture the analogy just a little longer, here are some weather/investing-related suggestions.

  1. We don’t control the weather, or the investment markets so don’t fret about either.
  2. The sun will come up in East and set in the West today, tomorrow and for the next many years no matter the weather. Same with the investment markets. Through good economic times and bad, through World Wars, political turmoil and inflation, the investment markets just keep humming along. Have a long-term perspective on the weather and the investment markets.
  3. If you’re going out for a walk and it’s raining, wear a raincoat and/or bring an umbrella. Same with investing. Think of cash as an umbrella. If you need money to meet a short-term goal, keep it in cash.
  4. You know the weather will change from day to day, week to week, and month to month. It’s random, but you know the weather will change. Same with investing. All securities go up and down in random patterns. Just accept it and have patience.
  5. There are times when the weather is extreme. Very hot, very cold, wet, snowy, windy, you name it, and Mother Nature can deliver it. There are tornados, hurricanes, blizzards, and gales. Need I mention the investment markets have serious downturns and long stretches of upward movement?

Through every kind of weather, we persist with our daily activities. And it’s the same with investing. Through every up and down day, through every bear and bull market, you must be persistent to have investment success.

Here’s an experiment to try. Turn on your television and leave the sound off. Switch on the weather channel and watch it for few minutes; then turn to CNBC and watch it for a few minutes, still with the sound off. You might be surprised how similar the two channels seem. Both channels have talking heads, video, charts, and graphs. Sometimes they may even look the same. Just a suggestion.

Remember: three keys to dealing with the weather and investment markets:

  • Patience,
  • Perspective,
  • Persistence.

If you would like to discuss any aspect of your personal financial situation – from saving for college for the kids/grandkids, to making sure you don’t outlive your money in retirement – click on the “Make an Appointment” button on our website. We’re fee-only and fiduciary financial advisors and dedicated to giving guidance that is in your best interest, not ours. We’d be delighted to discuss how you can weather any storm you’re experiencing or to make plans to enjoy sunny weather.