This Week’s Blogger: Scott D. Heins, CFP®, IAG Chief Investment Officer
The calendar likely ranks as one of the items we are most likely to take for granted. It provides an effortless structure and predictable rhythm for our lives. But that has not always been the case.
On Monday we celebrate President’s Day in honor of George Washington’s birthday. Since 1971 this celebration has been set on the third Monday in February. Prior to that it was celebrated on his actual birthday.
George Washington was born on Thursday, February 11, 1731. His birthday is officially Friday, February 22, 1732. In the future, his birthday could always fall on a Tuesday.
The Gregorian calendar we currently use has only been around for roughly 441 years. The British did not adopt it until 1752 when George Washington was already 21 years old. Therefore, he was born on Thursday, February 11, 1731, under the Julian calendar in use at the time of his birth.
Converting from the Julian to the Gregorian calendar required an adjustment of 11 days and — for dates between January and March — an additional year was tacked on. Thus, George Washington’s birthday is officially February 22, 1732.
Professors Steven Hanke and Dick Henry at Johns Hopkins University have proposed an alternative calendar – the Hanke-Henry Permanent Calendar. Their calendar is structured so that every day of every year is always the same, so February 22nd would always be on a Tuesday if their calendar is adopted in the future.
Assuming that what has occurred in the past will automatically repeat indefinitely into the future is a very appealing fallacy to humans. We yearn for predictability and often succumb to its mirage.
In reality, very little in life is truly predictable – especially in the financial markets. When the markets keep falling as they did last year, our fears make it easy to assume that they will continue on that course — making it “obvious” we should sell everything like other worried people.
When the markets keep relentlessly rising as they did in the second half of 2020 and all of 2021, our greed makes it easy to assume that they will continue on that course – making it “obvious” we should buy everything like other greedy people.
The only way to provide structure and rhythm for your portfolio is to establish an investment risk budget customized to your long-term financial plans like our Portfolio GPSTM. While this certainly does not guarantee your investing success, it does provide you with a structure that adds long-term investing context to the short-term trading world.
The calendar says it is “obvious” that George Washington’s birthday is February 22nd and that February can be a challenging month for the financial markets. Remember that neither may be true.
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.
Sources: Timeanddate.com, Britannica.com
Quote of the week:
Clifford Asness: “Predicting the future is harder than misremembering the past.”
LPL MMR 1-05360581