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"In Investing, What Is Comfortable Is Rarely Profitable.”

"In Investing, What Is Comfortable Is Rarely Profitable.”

| July 11, 2023

Navigating the rough investment seas is no easy task. The journey to reach your financial goals—much like life itself—is never a smooth endeavor. Instead, it’s full of crests and troughs, and unexpected winding turns, but there is a little hack that guides investors young and seasoned alike: history is our map, reminding us that being steady and having resilience during challenging times are instrumental characteristics for long-term success.

The last few years have indeed brought us significant market storms. Amid bouts of turbulence, though, stocks have generally held up well. A few sectors are even near their all-time highs as we embark on the second half of the year. It’s not a stroke of luck. Rather, this recovery underscores the virtues of prudent and steadfast investing. The recent rebound we’ve enjoyed serves as a testament to thoughtful (often boring) investment maxims, validating our collective efforts to build substantial and meaningful financial legacies for our clients’ families.

You see, investing and life come without guarantees. We can, however, glean wisdom from history and adopt time-tested principles. The recent past reiterates that smart investing often requires maintaining composure during downright frightening periods. Owning this unwavering resilience forms an integral part of our journey to financial success.

The task might be harder than ever these days. Overconsuming news and non-stop doom-scrolling social media make the investment landscape even more treacherous. A well-constructed financial plan can be derailed if you let the media stoke your inner animal spirits of fear and greed. The truth is, we own businesses. As shareholders, our fortunes are linked to publicly traded company profits, and while stocks are sometimes volatile, long-term economic growth (including inflation!) is reflected in share prices over time.

And despite what you sometimes hear from fearmongers, what goes up in the financial world does not necessarily have to come down. Pull up a decades-long performance graph, and you’ll see a pronounced uptrend, with downtrends taking place about 30% of the time. The broader upward trajectory is driven by cumulative financial results and mathematical logic, not some invisible force.

Investing also calls us to step out of our comfort zone at times. Echoing the wise words of Rob Arnott, creator of one of our larger strategies: “In investing, what is comfortable is rarely profitable.” Patience, coupled with a steadfast commitment to our long-term plan, becomes vital, especially when the road gets bumpy.

During those rocky times, however, we can heed the sage advice from Warren Buffett: “Do not be fearful when others are fearful. Be fearful when others are greedy.” This emphasizes the importance of maintaining our course and not getting swayed by mass hysteria or the irrational exuberance of the day. Easier said than done, for sure, but it’s fundamentally true.

As your financial advisors, we are dedicated to standing by your side, helping navigate through stormy times, so you keep your eyes set on the long-term prize: achieving financial goals and maximizing the fruits of your life’s work. Your continued trust in our services is deeply appreciated, and we look forward to steering toward a prosperous future together.

Thank you for taking the time to read this update, and please don't hesitate to reach out if you'd like to connect!

Your ISC Financial Advisors Team