strat·e·gy /ˈstradəjē/ noun- a plan of action or policy designed to achieve a major or overall aim
On May 2, 2011, two dozen Navy Seals from SEAL Team Six embarked on one of the most dangerous missions to date- to capture or eliminate the most sought-after terrorist in the world- Osama Bin Laden. There was a lot of uncertainty surrounding this mission. Lot’s of what ifs. What if he’s not there? What if there is more guards or potential threats than first imagined? What if there are innocent women and children there? What if there are rooms we didn’t know about inside his compound?
Even with uncertainty abound, one thing was certain as they climbed into those Black Hawks that night- they were prepared for any scenario that was about to take place. If something went against the original plan they would not panic, they would simply follow the procedure that was initially laid out before the mission.
Upon decent into Bin Laden’s compound around 1:00am local time something went majorly wrong. One of the Black Hawks crash-landed into the compound and amazingly nobody on board was hurt. It would have been very easy to panic- this wasn’t supposed to happen. Instead, they followed standard operating procedures and destroyed the helicopter and any data aboard. Then they carried out the mission at hand. All 24 Navy Seals came back that night alive- and best of all, successfully completed their mission.
Investing really is no different- aside from the fact you don’t risk your life to invest. Before you invest $1, you should have a strategy. And if you need that $1 tomorrow you shouldn’t invest it at all. Investing is a long-term game.
Any good strategy assumes there will be times that won’t go your way. It would be silly to assume that the market will simply go up 8% every year- we all know that’s not how markets behave. At the end of your plan your investments might average 8% however there were peaks and troughs and bumps and bruises along the way. It’s how you react during these times that determines if your mission (retirement) will be successful.
At HawsGoodwin Wealth, a disciplined rebalancing strategy is part of our plan. When markets drop, we rebalance- essentially selling assets that have gone up and buying assets that have gone down. When market go up, we do the same. Sounds easy doesn’t it? However, in the heat of the moment it’s hard for investors to stick to the plan- or even trust it. It doesn’t feel good to buy stocks after they have just dropped 20% and the constant news cycle is scary. Likewise, it’s just as hard to part ways with those tech stocks that have just gone up and up and up- it seems like they’ll continue to do so forever. History says they won’t by the way.
Sticking to your strategy is hard, but necessary to complete your mission- just like Seal Team Six. And panic is not a strategy.
HawsGoodwin Wealth, LLC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Integrity, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, which is available upon request.