Market Volatility & the Fighting Irish

You may laugh, but most of my readers know that I hail from the University of Notre Dame. The Fighting Irish. I fully realize that there is not a lot of in-between with “ND”: people either love them or hate them. Regardless, a thought occurred to me this week – a short thought that I believe critical to the mindset of investing.

ND 11-0As most of you know, and several may not, Notre Dame is undefeated in football so far this year at 10-0. Or as we Fighting Irish refer to it, “uNDefeated“. This past week, in a conversation with an insightful college football observer, it was pointed out to me that “you ND fans don’t care about anything except Notre Dame… you don’t seem to know or care about what else is going on around you or with other schools in the pollHe couldn’t have hit the nail any closer to the center of the head.

And, of course this led me to a thought about the markets lately and this year.

In my recent portfolio reviews with clients and conversations with friends, the question has come up about, “Boy, this year must be very stressful for you [as a financial adviser]”. Or “Wow, this has not been a great year for the markets”. When in fact, this year is entirely normal! Please ask me for the updated Greatest Chart Ever. This very simple chart summarizes that ON AVERAGE every year since the early 1980’s the S&P 500 is down 14% from high to low. So, this year is fairly typical in the average volatility within a calendar year.

The fact is that most investors do not remember the highs as vividly as they feel and remember the lows and declines (this is also a psychological fact: losses of any type of thing are far more emotionally powerful than gains). Investors feel the recent market declines far more strongly than they do the gains from earlier this year and in the last several years.

Along those lines, my largest focus is not on the “noise” of the daily markets’ ups and downs. Nor is my focus the up and down of a single month, quarter – or even year. Of course, I care deeply about market returns but these moves are not my central daily focus.

My central focus is on my clients and their lives. Each client, her or his or their lives. Things like when a new baby is born, a new job attained. Or when a client moves to a new home or city, decides to start or purchase a business, a death occurs, a job is lost, or when a client decides to take the exciting jump to retirement. These things are my central focus. The up/down of the markets is going on around us – and is largely out of our control.

Similar to ND’s current “uNDefeated” season – and the football game being played today at 2:30 pm at Yankee Stadium between Notre Dame and Syracuse – my focus and excitement is centered on that one thing. Perhaps at the expense of not understanding the College Football Playoff (CFP) scenarios.

I care about ND – and pretty much only ND. GO IRISH!

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