The Forgetful, & The Deceased

“There’s a wall street urban myth about a study commissioned by a prominent US investment firm. As the legend goes, the study uncovered something unexpected that the best performing accounts had in common…”

Market Commentary

The Forgetful & The Deceased

If you were hoping for a better 2022, stock markets haven’t cooperated to start the year. Global stocks dropped about 10% in January, which means investors who hold stocks in their portfolios will see lower account values for January. Although uncomfortable, this is not an unusual move for stocks.

Historically, the stock market has dropped at least 5% or more in 95% of calendar years. That means that when investing in stocks, in 19 out of every 20 calendar years, you will experience a 5% decline at some point throughout the year. Moreover, a drop of 10% or more occurs in roughly two out of every three years. Our wounds from the current decline are fresh, but we’ve experienced this same thing dozens of times in the past – and will experience it regularly in the future. Despite that fact, the stock market has a 150+ year track record of providing strong returns over time. 

There’s a wall street urban myth about a study commissioned by a prominent US investment firm. As the legend goes, the study uncovered something unexpected that the best performing accounts had in common: their owners had either forgotten about their accounts or had died. Although the research is often referenced, our fact-checking reveals that this particular study, at least on an official basis, never happened.

However, many real studies demonstrate that investors make emotional decisions with their portfolios, which leads to poor decisions made at the wrong times. So the idea of ‘Invest like you’re dead’ has some merit.

The reason is that people, living ones, are emotional about their money. Fear, greed, excitement, and regret are all genuine emotions, some of which you’re feeling right now. Unfortunately, unchecked, these emotions lead to poor investment decisions. We are not suggesting you “forget” about your investments but reminding yourself that emotion destroys wealth right about now would be a good idea.

Our team has a disciplined process for investment decision-making. Using a collaborative and structured approach to investing helps us avoid the pitfalls of our emotions (Also, Colin says he doesn’t have any emotions, so that helps!). We have carefully considered your goals and the timeframe for accomplishing them. Last month was another minor obstacle in a world that keeps sending them our way. Nevertheless, we remain constructive on the outlook for markets.

We are here, and we are available. If you need to chat, give us a call.

From your WLWP Team