“A discerning person keeps wisdom in view, but a fool’s eyes wander to the ends of the earth” – Proverbs 17:24
In today’s day and age, there are few things as difficult as sticking to a plan. Think about it, how many of us had New Year’s Resolutions that we were completely committed to in January but failed to keep going by March? How many of us create budgets at the beginning of the month, but by the middle of the month, we have already surpassed the planned budget? Most of us set out with great intentions and goals, but sticking to the course is what is difficult. Why is that? Is it because we truly don’t want to accomplish what we set out for? No, I don’t believe that is the case. Is it because we did not put together a proper plan to accomplish our goals? Perhaps for some, but I don’t think that is the reason. I believe so many of us fail to hit our goals is because we allow ourselves to wander from the plan we set forth originally.
For example, imagine that you had a goal of reading 24 books in a year, or two books per month. Every two weeks, in order to hit that goal, you would have to read one book. Based on your daily work schedule, let’s say that you set aside forty minutes every evening to enable you to accomplish your goal. Suppose a few weeks into the reading plan, you hear of a new series on Netflix that sounds interesting. Your day is already packed so you decide to replace one day where you are supposed to be reading for the Netflix show. That’s not a big deal, right? A few weeks go by and there is a live event that is happening that you, “have to watch”. It’s still relatively early in the year so you decide to skip reading to watch that event. Another week goes by, and another thing comes up that causes you to continue to put off your reading. This pattern continues throughout the rest of the year until you reach December. By that time, you should have been on book twenty-three, but you have only read three books. How did this happen? You had a good plan that should have been able to help you reach your reading goal, so what went wrong?
King Solomon provides us with the answer in Proverb’s 17:24. Rather than have “wisdom” in view, you were all over the place. You were not fully focused, engaged, and disciplined in sticking to a plan. Your eyes “wandered”. You allowed outside influences and situations to cause you to drift off course. As a result, you failed to accomplish your goals. This is a pattern that happens far too often. When I ask people why they were unable to hit certain goals, more times than not, it is because of outside circumstances that caused them to drift off the path they set out. To be fair, there will be situations where extenuating circumstances justifiably alter a desired path. However, more times than not, the circumstances that deviate us off our planned course aren’t that. They are little things that we allow to cause us to lose focus and change direction.
A wise person knows how to stay on course and stick to a plan regardless of what’s going on around them. They don’t allow for news or events to cause them to constantly change paths. If the plan that they set forth is solid, they know that the best thing to do is to stick to that plan. Those that know how to stick to a plan tend to be the ones that succeed over time.
My points have implications as to how you should invest and plan financially. If there is one area where there are distractions, it’s news about the stock market (especially during an election year). One day, it’s the end of the world and you need to go into cash. The next day, it’s the best day ever and you need to invest all your money in growth stocks. If you follow the news rather than seek to understand the markets and have a wise plan in place, the bombardment of “breaking news” will cause you to have a portfolio that is constantly changing but rarely grows. If you are constantly wandering from trend to trend, rather than keeping your eyes fixed on a structured plan, the only thing that will grow is your frustration.
I have talked to numerous people who are worried about the investment implications with the upcoming election. Should they shift their investments in one direction if Trump wins? Should they shift their investments in another direction if Kamala wins? Over the fourteen years that I have been a financial advisor, one thing has been clear to me: the stock market does well regardless of who is in office1. I don’t care if there is a Democrat or a Republican in office, the stock market increases. Going back to 1929, there were only three presidents who saw the S&P 500® finish negative during their tenure (Herbert Hoover, Richard Nixon, and George W. Bush). However, when you look at the circumstances that caused the market to drop during those periods, we were dealing with once in a lifetime events that are known as “black swan events”. The overwhelming majority of the time, the S&P 500® increases during a president’s tenure. Given that the data tells us that the market has performed positively regardless of who is in office, then how we invest should not be motivated by who is in office but by sound fundamentals. We need to keep our eyes focused on wisdom, and not get distracted by politics.
Keep your eyes focused on wisdom. Have a good plan in place and stick to it. If you don’t know if the plan that you have is a good one, don’t hesitate to contact me and we can take a look at it together. Bottom line, don’t allow for outside noise to cause your eyes to get distracted. Keep them focused and press forward. Those who do that consistently find success consistently. Those who wander find themselves drifting towards the ends of the earth.
All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
Past performance is not an indication or guarantee of future results.
The S&P 500® is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.