Dear Valued Client,
“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.”
– Charlie Munger, vice chairman of Berkshire Hathaway
Aloni Goh Wealth Strategy Notes:
Equities are in the midst of a pullback after strong gains in January. The headwinds are the same. Inflation, while abating, remains a bit sticky. Interest rates, while peaking, are not ready to ease yet. Economic growth is slowing and the threat of a recession persists. The war in Ukraine is still ongoing after a year with those involved seemingly eager to escalate it, or at the very least, keep it going indefinitely.
At this point, it seems that the markets are still in the midst of a bottoming action and while there is underlying long-term strength, there remains a possibility that the lows of this correction could be tested. We remain steadfast in our investment thesis that we are in a secular bull market for equities and we see this corrective phase as a healthy and necessary phase to build the base for the next leg up.
Extra Reading:
Patience. It’s what Charlie Munger was referring to in his quote above, and it’s the ultimate skill that few master in the current world of social media and instant gratification.
At Aloni Goh Wealth Management, we’ve been steadfast in reminding you that investing is a long-term plan. Just as the journey from Point A to Point B can be made in a myriad of ways, so can the growth of investments and your path to retirement. The common thread between them is having the patience to see your plan through even if there are bumps along the way.
Here’s Fidelity’s take on three reasons why investors shouldn’t worry if they have a plan in place even if their portfolios have declined double-digit in the past year, as many of them have regardless of their asset allocation mix, geographic exposure of the countless factors that can affect your investment portfolio:
1. I’m investing for the long term. “… invest in high-quality companies and hold them for at least 5 to 10 years. This long-term approach to investing can lead to higher blended returns over time, but it also means you need to stick through tough times of volatility, recessions, and even bear markets… I have to consider the bigger picture of its long-term performance.”
2. I’m managing losses waiting for a likely recovery“… it’s normal to have the urge to sell when the market is down. But we have to remind ourselves of what we’re investing for: the long term. You only incur losses when you sell. The stock market will eventually recover and bring many of the stocks that are down today with it… Temporary hurdles — like diminished earnings, lower values, or decreased revenue alone — aren’t enough reason to sell.”
3. I’m not relying on my portfolio for cash today“My brokerage account is for my future self… I definitely stay up-to-date on my investments, but there is no need to check their performance every day… If you are currently relying on or living off your portfolio for a portion of your income, know that you’re not alone. Remember that it could get worse temporarily, but it eventually will get better.”
Remember, think long term! Volatility is normal and time is on your side.
A small seed planted today may experience dry summers and freezing winters, but eventually one day it will turn into a tree.
As always, if you have any questions or wish to discuss whether any of the mentioned investments are suitable for you, please do not hesitate to call us at 604-658-3056 or email.
Best Regards,
Ron Aloni / Alan Goh / Jason Chen
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