LUTZ BUSINESS INSIGHTS
Nobody Knows Anything
JUSTIN VOSSEN, INVESTMENT ADVISER & PRINCIPAL
PUBLISHED: NOVEMBER 9, 2016
At times like these when you try to comprehend what is going on around you, I go back to take some solace in advice from one of the men that would be on the Mount Rushmore (pardon the analogy) of investments. Jack Bogle, who founded the Vanguard Group, when he was once a young brokerage firm runner and a fellow runner, much older than he was at the time, told him a secret which was the best investing advice he noted that he’s ever gotten. Simply put, his fellow runner told him: “Nobody knows anything”. Mr. Bogle went on to invent the index mutual fund and found the largest mutual fund company in the entire world on the heels of that advice.
The surprising results of last night’s election will reverberate in the history books for a long time. Today, many are going to try to rationalize the results and figure out why most everyone got it all wrong. The media got it wrong, most of the statistical models the world can compute got it wrong, and maybe even Trump’s own camp got it wrong. The hand wringing will go on for quite some time. The media, prognosticators and so called experts will spend the next few months trying to tell you all the things that will happen as a result of what they didn’t expect to occur in the first place. The sheer irony of that should be enough to make us all treat everything with a grain of salt.
Much like the Great Recession from 2008-09, the very few who predicted a Trump win will gain more “street credibility” and many will ask them to look in their crystal ball for some more wisdom. I am sure they’ll have more opinions, but just because they got it right once doesn’t mean they’ll do it again (see Meridith Whitney).
What I do know, is that the sun is rising as I type this. We are all going to continue to work and live our lives regardless of who was going to be elected. Those who voted for Trump, are waking up excited that he was elected and has a Republican Congress to potentially aid in his change mandate. Those who voted for Clinton are waking up with the hope that the numerous checks and balances built into the system mitigate some of the risk he may bring. Either way somebody was going to lose and it was going to be emotional, just be thankful we aren’t having any recounts or “hanging chad” issues this morning.
It will be hard to take the emotion out of the equation for some time here no matter who you voted for. This brings me to what we should do as investors today and in the next few weeks. With careful planning, we try to prepare our clients for the unexpected, we know it will come but admit we don’t know when. That is why most of us have some of our portfolios in low-risk/low-volatility investments. This is what we cling to when the emotions try to get the best of us. One of the biggest pitfalls of investing is to act emotionally rather than rationally. You anticipate these bouts of unexpected turbulence when the seas are calm, so we don’t have to react to them.
When it was apparent that Trump was going to win early this morning, S&P 500 futures were limit down at a five percent loss and other world markets were in equal turmoil culminating in Japan’s five percent drop. Five hours later, as I write this they are only off about 1.5%, giving up only part of the gains from Monday and Tuesday. It most certainly may end up to be a bad day or even a bad year, but nothing is permanent and change will occur.
So as you watch the talking heads try to make sense of all of this in the coming weeks just remember that “nobody knows anything”. Human beings by nature are an emotional lot and entirely unpredictable. Maybe that is the only thing we really truly know?
Important Disclosure Information
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Lutz Financial), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Lutz Financial. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Lutz Financial is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of Lutz Financial’s current written disclosure statement discussing our advisory services and fees is available upon request.
ABOUT THE AUTHOR
JUSTIN VOSSEN, CFP®, NAPFA + INVESTMENT ADVISER, PRINCIPAL
Justin Vossen is an Investment Adviser and Principal at Lutz Financial. With 21+ years of relevant experience, he specializes in providing wealth management and financial planning services for high net-worth families, business owners in transition, endowments and foundations. He lives in Omaha, NE, with his wife Nicole, and children Max and Kate.
AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
- CERTIFIED FINANCIAL PLANNER™
- National Association of Personal Financial Advisors, Member
- Financial Planning Association, Member
- BSBA in Economics and Finance, Creighton University, Omaha, NE
- St. Augustine Indian Mission, Board Member
- Nebraska Elementary and Secondary School Finance Authority, Board Member
- St. Patrick's Church, Trustee
- Mount Michael Booster Club Board
- Lutz Gives Back, Committee Chair
- March of Dimes Nebraska, Past Board Member
- The Current Financial Health of the American Consumer
- A 100-Year Bet Gone Bad
- Personal Finances: Focusing on What You Can Control
- Planning for College Pragmatically
- Remaining Calm When Uncertainty Surrounds Us
- Am I Ready to Retire? Finding Your Sweet Spot
- 5 Retirement Strategies for Small Business Owners
- Outsmarting the Ivy League?
- An Investor's Year-End Wrap Up & Tax Prep
- Nobody Knows Anything
- Add "Brexit" to the Long List of Uncertainty
- Financial Planning for College Grads
- Fight or Flight - Lesson Learned
- Social Security: The New Rules
- Putting Volatility in Context
- The Asian and European Fronts
- Bubble Looming or a Bubble Popped
- Re-Emerging Markets?
- A Market Perspective
- Timing is Not Everything
- "Yellen" at the Fed
- Mind What Matters...Focus Efforts On What You Can Control
- What to do With a Financial Windfall
- Love Indexes - Hate the Indexes
- Do I Own a Market?
- A Practical Primer On Volatility
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