Let the Good Times Roll

“Let the good times roll.”  I am partial to this expression because my Dad used to say this a lot either as a toast or a statement when things were going well.

As I look at the last few years’ markets, the current economy and the lives and businesses of my clients the expression definitely applies.

Let the good times roll!

Concert

Of course, there will always be something to worry about.  Always.

  • How long will these positive markets last?
  • Will my portfolio continue to gain in value?  How can I best preserve all this wealth I have created?
  • How long will these economic and business conditions continue to contribute to my personal and business success?
  • Will the risks I have taken in the past few years (that have paid off) continue to yield positive results?

And the questions and worries go on and on.  Worries are a constant factor in life. That is why economists (and meteorologists) get paid A LOT of money to tell us everything that can go wrong… in the name of predictive science. Yes, the best economists are highly educated and possess much intelligence. The best meteorologists are extensively trained in science. But worry without perspective or a PLAN can be unnecessarily destructive.

Celebrating good times without a plan can also be dangerous. The S&P 500, the representative index of US large companies, is up over 300% in its latest “bull market” which dates back to early 2009.  That is NINE YEARS of gains capped off by an over 20% gain (including dividends) in 2017. Definitely cause to celebrate, especially for those who sacrificed in some way to save and invest for the long-term over the past nine years.  But what now?  Here are elements of a PLAN, for starters.

1) Have a PLAN to rebalance your portfolio (for what this means, please ask me).

2) Have (or build) a comfortable amount of cash on hand – for emergencies, fun and whatever is important to you. Invest in conjunction with this cash savings.

3) Know how much you spend – and spend within your means – because when the proverbial $#!& hits the fan in the markets you may not feel as “rich”.  Even the highest earners may feel better temporarily cutting back on spending if their portfolio takes a hit.

4) Over the course of a market decline – declines can be swift or last months or more – is a key time to be able to invest (see #1 above).

Despite numerous challenges to individual industries (healthcare costs, government policy) there remain many, many positive forces contributing to the long-term health of the US economy (innovation, hiring, government policy). Managing your plan and behavior in these profitable times is just as important – if not more – as managing your actions in a downtrend.  Worries will almost always exist but how you plan and from whom you get your advice will greatly lessen overall worry.

With a PLAN, you can “let the good times roll”.

 

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