Issue 52.09

I have a friend who manages several billion dollars for one of the world’s largest money managers.  While most investors measure the daily movements in their accounts in hundred dollar bills, this man watches his accounts move enough each day to buy or sell several Las Vegas Strip hotels.  I asked him how he dealt with the stress of all that responsibility.  His answer was simple.  He said, “I don’t care where the price of a stock is going tomorrow or next month.  I only care where that company is going to be in five years.”

We often talk about having a compass to guide our life.  A compass gives direction by looking at a distant goal.  As our ship is tossed with the natural waves of the sea, the compass remains fixed on a non-moving point far beyond the horizon.  This man makes decisions every day that affect the life savings of thousands of people.  He makes those decisions by keeping his eye on the compass, while not being concerned about the waves.  His long-term view reduces stress in his job while providing a great benefit to his clients.

During the Christmas season I am often asked if I think we will have a “Santa Claus Rally.”  Of course next month it will be the “January effect,” then the “Spring bump,” and on it goes.  Traders who follow various almanacs are always happy to point out some trend tied to every day of the year.  The reality is, unless you plan on being a day trader, it doesn’t make any difference.  Like my friend who manages billions, where the stock market is going tomorrow has no bearing on whether or not you will be able to enjoy your retirement over the next several decades.

During the time of year when people are setting goals, take a look at your financial compass and make sure it is focused far off on a goal that is unmoved by the waves of the day.  Then you can truly enjoy the “Santa Claus Rally,” which is to rally around those things in life that really matter during this special time of year.  Merry Christmas.

Dan Wyson, CFP®  is author of the book “21 Financial Myths” and owner of Wyson Financial. 1173 S. 250 W #305 St. George 435-986-9525 – Securities offered through Linsco/Private Ledger member FINRA/SIPC

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