Blast From the Past – Road Trip, originally published April 4, 2018June 24, 2020 -
Categorized in: IAG News
With our weekly blog writer on vacation, we’d like to bring you a Blast From the Past with Scott’s blog, Road Trip, originally published April 4, 2018. A little over two years later, this seems incredibly timely.
Are you or your family planning a road trip this summer?
When your family takes a long road trip you can likely predict the overall attitude of the clan upon arrival based on two key ingredients: time and distance travelled.
While most families are really close, an extended period of time in close quarters can sometimes drive them apart. Quirky habits become annoyances. Conversations can run in circles. Games can run out of gas.
If the time invested in the car results in great progress toward a much-anticipated destination the family can maintain a positive attitude over time by focusing on that mutual goal.
However, if the distance traveled is limited due to road construction, crashes, or bad weather, the family’s attitude tends to change. These external obstructions hinder progress and tend to bring a negative vibe to the car.
Stock market corrections like the one we are currently riding through are similar to family road trips. An investor’s attitude toward market corrections is a function of both time and distance traveled.
The commonly accepted definition of a correction is a 10% decline from a record high. The S&P 500 Index has now traveled that distance twice thus far in this correction. We believe its destination is to eventually recover and reach another record high, but it may encounter numerous obstacles along the way that increase the distance traveled.
Those obstacles will take time to overcome which can be frustrating. Key strategies for making the time pass faster include focusing on the goal instead of the obstacles, drowning out noise by putting in your ear buds, or letting your eyelids close to dream of bigger things. The less time you spend focusing on noise the happier your trip will be.
After experiencing a smooth obstacle-free ride for a long time, traders are now obsessed with obstacles. Trade wars and inflation and technology missteps are making traders queasy.
While we don’t know how many obstacles this correction will need to drive around before reaching its destination nor how much time it will take before we arrive, we do know our disciplined investment process is designed to help our clients navigate through corrections based on their personal financial goals.
Drive safely and keep a positive attitude!
Quote of the week: A.J. Cronin: “Life is no straight and easy corridor along which we travel free and unhampered, but a maze of passages, through which we must seek our way, lost and confused, now and again checked in a blind alley. But always, if we have faith, a door will open for us, not perhaps one that we ourselves would ever have thought of, but one that will ultimately prove good for us.”