Most of us have some experience with hitting the fast forward button on the TV remote when watching a movie that we have seen before. We know the important scenes as well as the parts that aren’t particularly critical to the outcome. What if we could fast forward our personal financial movie for a year, five years, twenty years. What would we see?
Well, let’s look back over the past few years and think of this question already knowing the important scenes, just like we do in our favorite movies. Think back to October 2007 when the S&P 500 hit a record new high. Fast forward a scant 11 months later when the financial firestorm hit reducing the S&P by over 57% from its peak. Fast forward to today, where we find the S&P about 30% higher than the previous 2007 high, ( setting yet another record this week) and almost three times higher than the March 2009 bottom. This fast forward thing is a wonderful invention!
What the future holds is of course unknowable but we have a good basis to believe the movie we have been watching over the past few years will play again. If we can fast forward through the segments that don’t impact the result, we can enjoy these parts knowing the ending will be to our liking.
How Will Your Movie End?
Will our personal financial movie be a drama? A tragedy? A comedy? The script is being written each day by what we do, the decisions that we make, and the actions we take resulting from these decisions. If you decided to exit the market in 2008 and never re-entered, the movie scenes over the past few years have not been pleasant. On the other hand, if you stayed the course, the movie has been fun to watch.
Author/consultant Barry Lavally says “we are a feeling people who think”. That describes fairly well our internal makeup. Many investors have their wires crossed between their external view of the world today and actual economic history. These crossed wires can lead to deeply erroneous “money scripts” (beliefs that we have about money and investing), that negatively impact financial decisions. Our own financial movie script is in production. Will we be happy or sad when we see it unfold? Ready for a real conversation?