Newsworthy: Bucket List - Marty Moore, Carroll Financial
July 27, 2021

Newsworthy: Bucket List

Author: Marty Moore, CFP®

Bucket List

A recent… and very candid… confession from a long-time client:

“I’ve learned a lot about investing over the years, and I know you can’t grow your money without taking some risk.  But I’m retired now and last year (COVID induced market decline of over 30%) got me more anxious and nervous about the market than ever before.  I’m really, really thankful for the recovery and I know things look a lot better now but I’m still just as nervous now as I was a year ago.  I’m smart enough to know that I can’t put all my money in a savings account but I’m having a hard time.  I’d only be kidding myself if I didn’t admit that I’m living in fear of the next time it happens.”

Not having some level of anxiousness when the market drops, or even in anticipation of it, in my mind is not possible.  Seeing our account value drop, sometimes by a lot, is emotional – that’s just human nature.  I’m no different, I have these same feelings.  But I’ve learned how handle my emotions.  

How?  Do I have some secret or trick that I use to temper my anxiety? No, not really.  My ability to keep my emotions in check comes from having an investment plan that enables me to take a step back and take a bigger-picture view of what’s going on. 

Yes, the numbers on my account statement are now smaller but I always ask myself:

1.  Has the drop in the market – and my account value – significantly impacted my progress toward reaching my goals?  (Retirement, college funding, etc., whatever they may be.)

The answer has always been no.  Last year’s big drop in the market surely took a toll on the value of my investments… temporarily, as is always the case.  But it didn’t really disrupt my long-term plans.

2.  Do I still have an investment strategy in place that accommodates the inevitable market declines such that my long-range plans can still be achieved?

The answer has always been yes.  I’ll always re-evaluate and analyze where I stand when something big in the market happens, but I always come to the same conclusion: Yes, things don’t look as good as they once did (obviously) but I’m still on track.

3.  Should I change my strategy?

Seldom is the answer to this question ‘yes.’  But not always.  If a change is warranted it’s to consider the opportunity that a large market drop usually offers; to capitalize on the fact that the good, solid long-term investments that I hold are now selling for way less than they were just a short time ago.

The recent discussion with my client bothered me greatly though.  Not that he was nervous – that’s to be expected.  What bothered me was the level to which his nervousness had been elevated to genuine fear.  It’s natural to feel some amount of concern but to truly live in fear and not be able to sleep at night means I haven’t done a very good job at setting the right expectations or provided enough explanation – and exploration – of how he will remain on track even after a big market decline.

So, we took a step back and reviewed his long-term plan. 

1.  We confirmed his short-term and long-term goals.  We analyzed his current status and progress toward these goals.  Result: still on track.

2.  We reviewed his strategy. 

A short-term bucket invested ultra conservatively holds money that will provide all the income he needs for the next 4 years.(At the end of last year 2020 we rebalanced his overall portfolio and added to this bucket.)

A medium-term bucket invested conservatively holds enough money to buy a new car in 4-6 years and some additional money, if needed, to help his children (one may go to grad school and another may look to buy a new house).

A long-term bucket invested for growth (that took the biggest hit last year) is intended to grow at a rate that will outpace the rising cost of living for the next 30+ years.

3.  Is a change in strategy warranted?  Our decision was ‘no.’  The current plan made sense and was positioned appropriately based on his current needs and what he wanted to achieve in the future.

As investors, we have to accept the idea that to grow our wealth we have to invest.  And investing involves accepting some level of risk.  The bucket concept is useful in that it allows us to set aside enough money, invested conservatively, to provide for the income needed in the next 3-4 years.  It prevents the need to sell growth investments at an inopportune time in order to provide the cash needed for income or for some other purpose.  We can then really on the fact that hardly ever has it taken more than 5 years for the market to recover.  Historically, it has usually taken far less time for a recovery to occur.

To me, the real risk is not the periodic big market declines.  The big risk is the chance I may not achieve my goals.  For my retired client, the biggest risk for him is running out of money. 

As he puts it: “I don’t want my money to run out before I do.”

We have a sensible investment plan in place that is working towards his objectives, one that can help withstand the market shocks that come along.

Total Dominance

I think we all know that the U.S. is the dominant force in the world economy.  But I’m not sure we realize just HOW dominant the U.S. is.  What about China?  Are they not about to overtake us in economic might?  Aren’t we losing ground in technology and innovation?

Every year, PricewaterhouseCoopers releases a list of the largest 100 companies in world.

Almost two-thirds of the world’s largest companies (by total market capitalization) are U.S. companies.  U.S. technology companies still dwarf the rest of the world, including China.

Here’s another way to look at the advancement in technology over the past 30 years.  Below is a Radio Shack newspaper advertisement from 1991.  It shows everything you would have to buy back then that can now be done with your smart phone.

Speaking of total dominance, the summer Olympics are going on in Japan.  Not so much the winter Olympics, but the U.S. has historically dominated the summer Olympics.  After being postponed last summer, it’s been fun to once again watch the competitions and witness the performances of the best athletes in the world.  Because they are all so brilliant at this level it is sometimes hard to fully appreciate their speed, strength and overall skill level.

I’m not sure who came up with this idea (some are crediting the comedian Bill Murray) but I think it’s a wonderful idea.  It sure would be fun to watch.

“Every Olympic event should include one average person competing for reference.”

Impress Your Kids With Your Knowledge

Have your kids, especially younger kids, ever asked you a question that you don’t know the answer to?  And if they did, you can bet it wasn’t about mathematics or history, but something only a child would wonder about, like: how much does a cloud weigh?

An article on LifeHacker website offers some scientific (meaning: accurate) answers to off-the-wall questions that kids have posed to their parents over the years.  Some of them are pretty interesting to adults, too.  For example:

What color is a polar bear’s skin?  (It’s actually black.  Its fur is hollow and transparent, and looks white.)

Do snails have teeth?  (Yes; they literally have thousands of them.)

Why don’t cats like candy?  (They can’t taste anything sweet.)

Some other interesting facts: A shrimp’s heart is in its head.  Octopuses have blue blood.  A bolt of lightning can be five times as hot as the sun.  There are more than 1 million ants for every human on earth.

Oh… so how much does a cloud weigh?  (A cloud can weigh over a million pounds.)

As always, thanks for reading. 


Required Disclosures:

All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
The S&P 500 Index is a capitalization‐weighted index made up of 500 widely held large‐cap U.S. stocks in the Industrials, Transportation, Utilities and Financials sectors.
The Dow Jones Industrial Average is a widely followed market indicator based on a price-weighted average of 30 blue-chip stocks that trade on the New York Stock Exchange which are selected by editors of The Wall Street Journal.
A diversified portfolio does not assure a profit or protect against loss in a declining market.
Asset allocation is an investment strategy that will not guarantee a profit or protect you from loss.
You cannot invest directly in an index. Additional risks are associated with international investing, such as currency fluctuations, political and economic stability and differences in accounting standards all of which are magnified in emerging markets.
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC.
Opinions expressed are not intended to be investment advice or to predict future performance.
All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic and performance information is historical and not indicative of future results.
Past performance does not guarantee future results.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.
The information being provided is strictly as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third‐party technologies, websites, information and programs made available through this website. When you access one of these websites, you assume total responsibility and risk for your use of the websites you are linking to.

E-Newsletter, Investment Management
Share This
Skip to content