"Long-term investors really only have two different scenarios they need to plan for: retiring financially secure and staying that way."
That vision is how financial advisor, CFA and active SA contributor Eric Nelson opens his latest article provocatively titled "what will investment returns be for the rest of your life?" As is his wont, Nelson reviews market history as a means of calmly assuring readers that if they focus on the long term while ignoring all the short-term distractions, they will realize their goal. I quote:
While the investment and financial planning industry is obsessively focused on predicting short-term market and asset-class returns, the long-term investor can safely ignore these prognostications. Not just because they aren't accurate, but because short-term results have very little impact on your long-term results."
It occurs to me that aside from the merits or demerits one might find in the advisor's approach, the consistency of his message and sincere conviction are really demonstrations of advisory leadership - for the sort of investor who knows that that is what he or she needs.
I found a really nice quote from David Ben-Gurion, the founding prime minister of Israel. He could have been speaking to financial advisors when he remarked: "There is all the difference between giving people what they want and teaching them what to want."
That seems to be the distillation of Eric's latest article, his previous articles and his many comments on the site criticizing brokers who merely fill orders or pliant "advisors" yielding to their clients' fears. It's a reassuring message, to be sure, but hard for many to hear at a time of such thoroughgoing anxiety about frenzied markets and a weak economy.
So what do you think? Would finding an advisor in whom you could repose confidence grant you a new lease on life, as it were - devoted to family, hobbies, etc.? Are you interested in and willing to be taught what to do, or do you need to maintain control when it comes to something as sensitive as your own money? Which approach is more apt to lead to peace of mind? (I imagine the answer would vary based on personality type.)
For now, here are today's news and views for advisors:
- Jeff Miller: the value traps financial journalists tell you to avoid are actually the income opportunities you should grab.
- Roger Nusbaum agrees: stock-market TV doesn't make you a better investor.
- John M. Mason: heavily stimulated but now stalling auto sector provides a read on the economy.
- Gary Gordon: the idea that some governing body will have the capital needed to save the financial system may prove fanciful.
- AllianceBernstein: "co-fiduciary" could make DC plan sponsors "co-defendants."
- Economist John Cochrane challenges his colleagues' view that Hillary Clinton is apt to 'make wages grow again'.
- The Heisenberg sold everything he owned among the six top-performing asset classes on Monday.
- One reason why he did so? The BOJ has taken monetary easing to the level of ETF-printing.
- VanEck: "Russians may someday proclaim, 'Communism failed, Western sanctions failed, but Russian markets did not fail'."