New year, New Same Old Same Old.
"Disruptions triggered by the impact of Covid-19 have accelerated an ongoing evolution of the craft of investing, characterized by the adoption of risk-factor-oriented approaches in portfolio construction, a focus on total portfolio outcomes over relative returns, liability sensitive investment approaches, and a greater appetite for harvesting illiquidity premia. Going forward, they will generate new fast-flowing rivers of growth in areas including non-traditional sources of yield, multi-asset strategies, return-oriented private market strategies, strategies that navigate volatility, "whole portfolio" solutions, and tax-efficient solutions for retail investors." -Mckinsey & Company
Are you seeing this word salad? Yikes. I’ll take a ‘thousand island’ with that, please.
This is an excerpt from a Mckinsey & Company update that was shared in a recent Pinnacle Wealth Brokers email blast. I assume it was meant to be about the importance of the private capital markets but, to be perfectly honest, I can’t make heads nor tails of the message here.
What I can tell you is that there are two times when these kinds of vague but loud messages come out:
At the start of every new year, when it’s time for the arbitrary “new you”, “everything is different this time” rhetoric, and
When global markets and worldwide economies go through something drastic; à la economy strapping pandemic.
It is always the same message, always. It never changes, and it goes a little something like this:
“The world has changed! Everything is different now! Nothing will ever be the same! It is time for you to completely rethink your paradigm and rework your archetype and rejigger your criteria for a selective campaign of success and exemplary jargon words that are meaningless!”
Apologies if I am a little jaded, and perhaps even extremely cynical, but the reality is that nothing has changed; we’re just going through a hard time. I will admit that in certain cases things do get worse and perhaps some things do change. After 2008 we saw an incredible amount of economic and fiscal policy change that helped create one of the most prosperous times our planet has ever witnessed. That economic run, spurred on by success in the US, has hardly taken a step back even with a pandemic that has seen millions killed (that we know of), nearly 100,000,000 infected (that we know of), and drastic actions taken by governments and people alike.
Last week on January 6th, 2021, a Wednesday, the world’s largest economy nearly lost its democracy in a semi-violent failed coup attempt that saw 4 dead, numerous wounded and sent shock-waves through the planet. The markets themselves barely registered, they even went up a little bit.
The world apparently changed last week, but the markets just moved along.
My suggestion to you is to do your best to do the same. Nothing ever really changes. The truth is, people, we the people, still need to buy things and do stuff. We eat (hopefully), regardless of whether the markets are up or down. We shelter (hopefully), regardless of whether markets are up or down. We clothe, we educate, we nurse, we iPad, we car, we movie, we drink, we drug, we walk, we run, we do all the things we did the day before and the markets continue on.
Nothing will have changed, but there will be wave after wave of messages suggesting to you that everything has changed and you must redefine your plan (with their concepts and ideas, of course!). This is what the above message is about- it is marketing. I can’t tell you what Mckinsey & Company does, but I don’t imagine it is helping retail investors find and navigate reasonable and suitable risks for their portfolio.
We as the consumer, and in this case the investor, must do our best to remember that a lot of marketing money is spent trying to get you to change your habits. Using fear and misinformation is a great way to pressure people into change.
On the left, a reasonable assumption as to why someone would stop, drop and do something stupid. It is easy to pressure people into unnecessary action when there is stress.
On the right, the reason why we should educate ourselves, and continue a rational discourse with experienced advisors, regardless of the level and severity of interesting things happening at any given moment.
We do our best to educate and promote positive messages to create a positive experience for our clients and for this community we have created. When times are tough and it feels like the world is changing, we don’t look outside for a complete change of business. We look to our experience and what we learn every time something goes awry and do our best to remember that tomorrow the sun will rise, and eventually so will the value of your investments with us.
In our shared experience, generally speaking, a pivotal paradigm shift we see in our clients is the change that happens when they get involved in our education process and commit to being more involved with their investments. I know it may be hard to understand today when we are unable to meet in person or have large group events and share an experience together, but this will pass and we will continue down this track.
As we evolve in our thought, and life moves forward, we don’t close the door on our past experiences- which is what you’re being told to do when you see the messages like the one in the header of this post. To immediately pivot because things have changed. We prepare for and respond to the unknown, we don’t react to it.
I can assure you, things have not changed. I can assure you that while components of our message and tactics may change over time, our end goal has not changed. We will continue to educate you, to help you grow and protect your capital, and to try to keep the jargon to a minimum.
Thanks for reading, let’s get in touch soon.
Darris Cameron
President & COO
Financial Value Inc.