As we near the end of 2020, we can look back on what we have experienced over the last 12 months, and more importantly, what we have learned from our experiences. Good and bad, we have all been impacted by the events brought on by COVID-19.
Evaluating the past is helpful in looking forward to a new year and the seasons of life ahead. Unfortunately, it is easy for our perspective to be swayed by biases we have developed. Biases are subconscious thoughts that shape our opinions and drive our behaviors. A bias might cause us to make assumptions about the future, such as “The market has changed and will never be the same again,” or, “Life as we know it has changed forever.” These are examples of Recency Bias. Our brain takes a recent experience and uses it as an atlas for all future decisions. It is almost like tunnel vision; we can only see one outcome.
Over the past 26 years, I have learned that every experience is different. Each is driven by a new set of circumstances – always changing. Our personal situations, the economy, and financial markets are fluid, ever-shifting. No one can predict what will happen in the future, positive or negative.
The market has faced many headwinds in the past – the dot com bubble, the Great Recession, Brexit – and has recovered from each. The economy has ebbed and flowed through market cycles while dealing with inflation pressures, political change, unemployment, and many other factors.
When I think of these hurdles, which seemed insurmountable at the time, I cannot help but be awed by the resiliency that followed the hard times. It is that perspective that gives me hope and a positive outlook for what lies ahead.
While the next six months may look fuzzy and hard to predict, the longer-term picture appears more defined, clear, and encouraging.
I am grateful for you, our clients, and the opportunity to help shape your financial future. I wish you and your family health, happiness, and prosperity in the years to come.
Wishing you a safe and happy holiday season.