Professional athletes have mastered their respective craft; they are no longer battling the game itself. Where speed, strength, accuracy and the ability to adapt come together to form each player’s talent, the outcome of a contest between talented opponents is often decided by a razor-thin margin (think golf or tennis at its highest level).
What is the world’s most complex and thrilling loser’s game? Investing. History shows it is possible to be a practical, prudent and intelligent investor – but talent (in the sense used above) is not an option in the investing world. There are simply too many variables. Instead, you need other qualities – persistence, patience, endurance, good judgment and consistency – to win. Fear, emotional reactions and losing sight of long-term goals are potential mistakes in the world of investing. The best strategy is playing a shrewd game within the market’s uncertain, variable environment.
Today’s investment environment presents many challenges: low interest rates, high stock market valuations, a pandemic, high unemployment, supply bottlenecks, large national debt, inflation concerns, rising taxation and Federal Reserve bond purchasing, to name a few. These challenges, along with those in the past and yet to come, leave many investors with the uneasy feeling that something bad is going to happen in the market. (At some point, of course, it will.) That disquiet may tempt us to “time the market” by getting out just before things go bad, then jumping back in just as the recovery starts. There are two potential outcomes of timing the market: lucky or wrong. Wrong is the likely result 98% of the time. In my 36 years in this business, and in all of my reading and studying, I have never come across a single paragraph suggesting that market timing is a successful investment strategy.
If professional investment managers like Bell Institutional Investment Management can’t successfully time the market, why would you hire one in in the first place? For starters, Bell’s investment management team has a solid educational background, with most of the team having earned designations such as Chartered Financial Analyst (CFA®), Certified Financial Planner (CFP®) or Certified Public Accountant (CPA) – and those who don’t already have one of these designations are probably working toward that accomplishment. Second, discipline and investment philosophy come together to deliver the qualities of persistence, patience, endurance, good judgment and consistency needed to “win.” Third, our team’s collective education and experience help us provide asset structures that deliver return and risk profiles along the efficient frontier (designed for the highest possible returns with the lowest possible risk). Fourth, we help clients allocate assets in a manner consistent with their investment profiles. Fifth, our clients receive the unequaled service that is a hallmark of Bell. Finally, Bell’s investment team has the discipline to keep it all on track to help clients reach long-term goals.
How do things look so far this year? Our fixed income (bond) allocations are slightly positive, beating popular bond indexes that are showing small losses year to date. Our global equity returns are in the mid-teens, and our equity income strategy is having a very strong year, performing in the high-teen range. Balanced allocations (about 50% in stocks and 50% in bonds) are showing returns in the 7% range. All of these returns are stronger than we estimated at the beginning of the year. Market demand for bonds and stocks has been strong. There has not been a stock market correction of 5% in the last 9 months, while that type of event normally occurs an average of three times a year.
Until next month, here’s to a steady hand on the wheel and even pressure on the gas pedal.
Deposit and loan products are offered through Bell Bank, Member FDIC. Investing and wealth management products are: Not FDIC Insured | No Bank Guarantee | May Lose Value | Not A Deposit | Not Insured by Any Federal Government Agency.