Last year around this time, I wrote a post titled, Nobody Saw This Coming about the performance of the markets in 2019 when it surprised everyone. Then 2020 came along and said, “Hold my beer.”
Nobody saw the global pandemic coming. Nobody could have presumed global shutdowns. Nobody saw a 34% decline over 33 days. In part, because that combination of things had never happened during the life of anyone living today. In some cases, they’ve never happened ever.
Taking it to one more level, as we reached the doldrums of late March, many people thought something far worse was still in store. Nobody (and I mean nobody) saw the market finishing the year up 16.3%, It was a wild ride. Yet, here we are.
Can we conclude, once and for all, that we’ll never know what’s going to happen next? Can we conclude that we’ll never see it coming? It’s impossible to time these sorts of things. It’s impossible to time the bad things that might happen, but it’s equally impossible to time the good things.
The long-term trendline up continued despite the turmoil. Despite the political rhetoric. Despite the loss of life around the globe.
And yet, there are plenty of people offering their predictions as to what is going to happen in 2021 in terms of market performance. After a year like 2020, I cannot even imagine the gumption required to step out there and proclaim something so unknowable with such certainty.
We cannot control the outcomes associated with the market. We can only mentally prepare ourselves for the possibilities and prepare our financial plan to account for both the good and the bad scenarios. How we prepare is the only thing that is up to us. This fact shouldn’t be disheartening, but encouraging.
When we focus on the things inside of our control and prepare for the infinite possibilities to the best of our ability, we offer ourselves the opportunity to let go and live our lives. Instead of feeling like we’re at the mercy of the market, prepare. Taking the action of preparing offers the confidence that everything will work out okay, even when everything seems to be going into the toilet.
It’s not a matter of if, but when the market will go into the toilet again. With the market around all-time highs as we speak, take this as an opportunity to revisit your retirement income plan from A to Z.
Does the asset allocation you’ve chosen take into account the need to grow your income over time? On the other side of the coin, how many years of income do you have set aside to ride out another market downturn?
Don’t try to predict what’s going to happen. Prepare.
Once you’ve prepared, revisit your plan a couple of times per year. Beyond that, there’s a good chance that you are getting lost in the details of trying to control something that is entirely out of your control.
Take heart. Have faith that you have done your due diligence. You have prepared and everything will be okay.
Stay the course,
This post is not advice. Please see additional disclaimers.