As an RIA firm owner and financial advisor to hundreds of households, if I could segment client into two buckets, optimists and pessimists, I would say from twenty years of experience that the optimists have higher returns. Easily.
First they tend to have heavier strategic allocations to equities. Next, they generally believe the best time to put cash to work is today, not tomorrow. And those that are decumulating assets leave their money invested as long as they can before they need it.
What’s amazing to me, and I never would have guessed before entering the business, is that those clients we are always trying to keep in their seats and keep from panicking and taking their money out of the market are those with the most conservative allocations to begin with, reflecting their pessimism, not their need for fixed income to match a spending liability. Many may not even touch their equities during their lifetime.
Isn’t there a saying “that we don’t see the world as it is, we see the world as we are?” Or something like that.
Great write up. The framing of the 3 possible scenarios - which is so smart - makes it seem ludicrous to be a bear.
As an RIA firm owner and financial advisor to hundreds of households, if I could segment client into two buckets, optimists and pessimists, I would say from twenty years of experience that the optimists have higher returns. Easily.
First they tend to have heavier strategic allocations to equities. Next, they generally believe the best time to put cash to work is today, not tomorrow. And those that are decumulating assets leave their money invested as long as they can before they need it.
What’s amazing to me, and I never would have guessed before entering the business, is that those clients we are always trying to keep in their seats and keep from panicking and taking their money out of the market are those with the most conservative allocations to begin with, reflecting their pessimism, not their need for fixed income to match a spending liability. Many may not even touch their equities during their lifetime.
Isn’t there a saying “that we don’t see the world as it is, we see the world as we are?” Or something like that.
Great post Sam. Thank you. 🙏