So I went to the eye doctor a couple of weeks ago for my annual eye exam.
Now that I'm in my mid-forties, I can sense that my vision isn't what it used to be. The doctor tells me that soon I'll need reading glasses. I guess that is when my arms won't be quite long enough and I'll rather the waitress just order for me than me try to read the menu.
For now, I can still see fine. I mean, I'm no Superman -- I can't see through walls or anything. I accept my mortal limitations.
But then I asked my Optometrist a question that I don't think he'd ever been asked before, "Do you think I'll ever be able to see the future?"
In my work as a Wealth Advisor, I explained, everyone seems to think, or at least they want to believe, that I can see the future. With all this talk about what interest rates will do, what will happen with Obamacare & Social Security, will ACME Corp's earnings beat expectations, etc. you'd think that I’m at a distinct disadvantage if I can't at least sneak a peek at what's to come tomorrow or next week or next month.
My Doctor paused, then laughed as he told me what I already knew. "No, you won't be able to see the future."
But let me share a little secret with you: I'm not the only one that can't see the future. You can't either. Neither can your advisor, your broker, your planner or any of the "talking heads" that fill the Wall Street research departments.
Think about that for a minute. Go ahead, I'll wait…
All the time, energy and money that is spent thinking and talking about the future on CNBC and in the pages of all the financial papers and magazines is nothing more than guesswork. Read that again. While it seems so obvious on the surface, many of us don't act like we really believe it.
Time for another secret: once you accept this fact, like Karin and I did a long time ago, it's such a liberating experience. You no longer have to scour the pages of the Wall Street Journal for the latest and greatest prognostications. You don't have to listen to Jim Cramer scream at the TV. You don't have to "know" what's going to happen with the economy or tax legislation or anything else.
All you have to do is craft a comprehensive financial plan that is tied to the things that are most important to you, and then you need to implement the plan with a high quality, well-diversified portfolio. Beyond that, you'll need to make adjustments to incorporate new information as you get it, but you no longer have to try to see the future. You can leave that to all the "advisors" who'd like you to believe that's what they can do.
And by the way, crafting comprehensive financial plans implemented with high quality, well-diversified portfolios is our specialty. Come "see" the difference!
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.