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Black Swan Events & Your Investments

By | 2015, Executive Message, Money Moxie, Newsletter | No Comments

Dear Valued Financial Partners and Friends,

Black Swan Events are events that are unexpected and unprecedented. They are rare and have an extreme impact when they occur. The concept of a Black Swan Event was popularized in Nassim Nicholas Taleb’s book, “The Black Swan: The Impact of the Highly Improbable” (Penguin, 2008).

Some modern day Black Swan Events include the sudden outbreak of World War I, the surprise attack on Pearl Harbor in December 1941, and the sudden terrorist attacks in the United States in September 2001.

Shortly after September 11, 2001, I attended a financial presentation where the instructor had prepared two charts and adjusted them to the same scale. The first chart was the S&P 500 Stock Index in the days just before and immediately following the surprise military strike at Pearl Harbor on Saturday, December 7, 1941. In my mind the instructor’s graph documented and encapsulated the general public’s human, sell-off reaction to this Black Swan Event as evidenced by the size of the stock market drop.

The second chart was the S&P 500 Stock Index in the days immediately surrounding the surprise terrorist attacks on Tuesday, September 11, 2001. Again, this second chart depicted our human, sell-off reaction to another rare, but major Black Swan Event by the size of the stock-market drop.

Now the magic! Remembering both charts were adjusted to the same scale, when superimposed, the two charts became indistinguishable! In 2001, our sell-off reaction, our human behavior was, for all practical purposes, identical to that of our predecessors—some 60 years earlier—by dropping approximately the same percentage.

The bottom line: No one knows when the next Black Swan Event will occur. Whether man-made or not, Black Swan Events will continue. Earl Nightingale stated in his book, The Essence of Success,“Only eight percent of your worries are worth concerning yourself about. Ninety-two percent are pure fog with no substance at all.”

Black Swan Events will inevitably happen in the future. The challenge is to stay invested so that you don’t miss out on market opportunities. Don’t allow your personal emotions to keep you from reaching your long-term goals.

Bullish Best Wishes,

Roger M. Smedley, CFP®
President

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If You Think Financial Planning is Expensive, Try Ignorance

By | 2013, Executive Message, Money Moxie, Newsletter | No Comments

Dear Valued Clients and Friends,

The poor don’t have a monopoly on uninformed financial decisions. Some years ago I was invited to make a presentation to a group at a country club. I passed a clipboard around and asked each participant to write down how much money he or she had lost through poor decisions. After recording the lost amounts, I asked each person to fold the paper over, thus covering his or her answer, and pass the clip board to the next person.

After the clipboard had been passed around the room, I added the losses. Before revealing the group’s cumulative loss, I expected the amount to be in the tens of thousands or, perhaps, in the hundreds of thousands of dollars. Boy was I wrong. The total cumulative loss was in the millions of dollars!

We routinely find people who have made poor or uninformed financial choices. Assuming you know the smarter choices and rules regarding money, or assuming that something is not a scam, can be disastrous—not only affecting you, but also your spouse and future generations!

You’ve worked hard to accumulate your nest egg. We believe you have to work twice as hard to protect it so that it will last as long as you do. How do you do this? By avoiding unnecessary risk. No one cares, works harder, or stands to benefit more from your financial decisions than you and your posterity.

Prudent planning, especially at key turning points in your life will help you realize the full benefit of your financial choices. But through unwise choices, without a financial guide, you will encounter pitfalls that may turn into serious consequences and losses.

Making a choice is one thing, but is it the best choice for you? We’ve seen clients in tears because they have acted without talking to us first. Making your money last as long as you do requires sophisticated planning. It is both an art and a science. Let us help you determine your financial destiny. It’s a free call and consultation.

Bullish Best Wishes,

Roger M. Smedley, CFP®President

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Becoming Financially Aware

By | 2013, Executive Message, Money Moxie, Newsletter | No Comments

Dear Valued Clients and Friends,

Over the years, people I randomly see will almost always ask my opinion about the market, gold, the economy, etc. They might say that they successfully got out of the market, but they never knew when to get back in. As a result they never did get back in the market.

I simply tell these good folks that “making those tough decisions is exactly what we do for our clients at Smedley Financial.”

Our best clients are those that have a good financial education. By that I mean they understand what we are striving to do for them in terms of protecting and growing their wealth. This is all done with respect to our clients’ goals, resources, ages, and risk tolerances. We don’t want our clients to outlive their resources. We want their money to last as long as they do!

Investment management and financial planning are not simply one-time events, but rather they are ongoing, living, and dynamic processes. Regular communications and visits are more essential than ever with respect to life’s events, financial and otherwise.

We invite you to come in and see us or call us so that we can be of the most service and benefit to you.

Bullish Best Wishes,

Roger M. Smedley, CFP®
President

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