Football season is here, and I see a parallel between how coaches prepare for games and how investors pursue long-term goals. Coaches do not rely on a single play or focus on only one part of the game; they plan for all four quarters and adjust as game conditions change. They say football is a game of inches and in life, making the right steady and consistent plays, inch by inch may determine success. Investors should be equally flexible while remaining focused on long-term growth to outpace inflation. Volatility is the price of admission for that growth: asset prices respond to events, news, and expectations about the economy. The ebb and flow of prices are anticipated but how we choose to respond to price changes may impact whether we are victorious. Like a team that loses yards on a bad play or is blindsided by an unexpected turn, investors may face short-term setbacks. To have a chance of winning the long game, we must stay in the game and committed to the plan, and keep moving toward the goal line.
The truth is that we need a game plan that will carry us through life. The real risk is living a long life without assets that keep pace with inflation, making it increasingly difficult to meet future income and spending needs.
Recent volatility serves as another reminder of how markets can react when fear and uncertainty strike. As the markets are a place of exchange between buyers and sellers, when someone sells shares at a certain price, there is someone else on the other side of the transaction, willing to buy those shares, at that specific price. Why would someone else be willing to buy when the only option you want is to sell? While both parties may have different objectives, history has shown that investors who sell during periods of fear often miss opportunities when markets recover.
We cannot control the market or our circumstances, but we can build a diversified portfolio that is more resilient to broad market volatility. At certain points in life—just as in a football game—we may need to take calculated risks to capture the growth required to reach our goals. A coach may call a long pass even though it is less likely to succeed than a short screen pass, because the potential gain is much greater. Similarly, investors may need to adjust a strategy, which could include taking on calculated risk for the long-term reward. With football, each new play is called based on the situation on the field, yards to go before a first down, and matchups advantages. For investors, it is wise to understand your position in life and yards to go. One needs to know how much they can realistically spend. You need to play both offense and defense to win.
Working with an advisor (coach) can guide you on the next pay call that reflects your changing risk tolerance, time horizon, and objectives. Huddling for a regular rebalancing schedule can keep your asset allocation aligned with economic conditions, trends and your risk profile so you win the game. The advisors at ClearView Wealth Management work as a team of coaches with various experiences and expertise with commitment to help families and businesses prepare a game plan.
The football sometimes takes unpredictable bounces and ends up where we would least predict. Market volatility is also unpredictable, but it is inevitable. Emotional reactions are optional. Investors who remain disciplined, diversified, and focused on their long-term objectives are often best positioned to weather uncertainty and benefit from future opportunities. A thoughtful financial plan, reviewed regularly with a trusted advisor, can help keep your portfolio aligned with your goals regardless of market conditions.