Mountain Biking & Investing

Too Hot, Too Cold…What Should I Do? Mountain Biking & Investing

We have had lots of discussion and questions about our previous newsletter "Too Hot, Too Cold…or will the FED get it Just Right?!" The short summary: if the FED is Too Hot on inflation, that might push the economy into a recession and the stock markets might drop even more. But if the FED is Too Cold, that might push stock prices up and result in happy investors but continued inflation.

We have been encouraging our clients to review their upcoming income needs and raise cash now from their portfolios to fund future withdrawals. That won't avoid the pain of a market drop, but it will buy time and allow you to secure some income for lifestyle without having to sell investments in a potentially worse downturn in 2023.

Mountain Biking & Investing

Just came back from a mountain biking trip to Sedona and thought about the many parallels between Investing and Mountain Biking.

With Risk Comes Rewards

We rode the Hi-Line Trail in Sedona — a double black diamond, incredibly difficult trail. We did it anyway, and as a consequence enjoyed incredible views and exhilarating scenery far better than the easier flatland trails below us. Similarly, investors that are willing to take the risks of owning stocks have often been greatly rewarded over the long haul.

Stock market crashes are rare and infrequent, and also hurt while they are happening. But the rewards over the long term far outweigh the crashes — both the potential growth of wealth from investing, and the sheer joy of cycling in the wilderness.

A Good Mountain Bike is Like a Well-Diversified Portfolio

I ride a beautiful, full suspension carbon mountain bike with amazing technology that allows me to take more risks and ride features I could not do on a lesser bike. In much the same way, a well-diversified portfolio may help you ride out the rough times and tribulations of a bad stock market — like the one we are experiencing right now, or like the horrible 2008–2009 downturn. Diversified portfolios based on data-driven design and historical trends may help an investor, just like my amazing bike helps me when I ride.

It Helps to Have an Experienced Advisor Coach You Through Difficult Times

My son Spencer is a superb mountain biker, extremely skilled, and also a gifted teacher and encourager. He helped me to ride things on those Sedona trails that I never would have attempted alone. In the same way, we hope to be that experienced coach for our clients — helping you navigate difficult financial terrain with confidence and skill.

We can review your income plan and raise cash as needed at your next scheduled portfolio meeting, or please reach out to us if you would like to have a conversation about this sooner.