What Does the Deschutes River & the Stock Market Have in Common?


(Photo by Jill Rosell Photography)

Are you the weak link when it comes to your pre- and post-retirement financial success? Benjamin Graham, a prominent economist and investor known for coaching Warren Buffett, had the following to say in his book The Intelligent Investor when observing the irrationality that seized the market in the Great Depression: “The investor’s chief problem—and even his worst enemy—is likely to be himself.” Graham recognized that investing requires a certain mentality. “Individuals who cannot master their emotions,” he said, “are ill-suited to profit from the investment process.”

To illustrate that point, consider stand-up paddling (SUP), an ancient sport of Hawaiian heritage that was reintroduced to the modern water sports world by surfing icons Laird Hamilton and David Kalama. Today it is an emerging global sport that has experienced an enormous rise in popularity. Surfing legend Gerry Lopez has helped to make it ubiquitous in Central Oregon. I believe one of the reasons for its popularity is that unlike surfing, paddleboarding is very easy to learn. It also offers great fun as well as a serious workout, so if you haven’t experienced it yet, give it a try.

Just last week I had an amazing bonding experience with my son Jack paddleboarding on the Deschutes.  I knew it was time for him to experience more than the mellow currents meandering through the Mill District or the placid waters of Elk Lake. So we set off for the stretch of river between Dillon and Benham Falls. Later that evening I could not help myself  but correlate the similarities between navigating the Deschutes River and navigating the stock market.

As a long-term observer of the markets, it never ceases to amaze me how violent and rapid market moves can be in both directions. Since 1946, there have been ten bear markets where the market decline has exceeded 20 percent. The average decline has been 35 percent.

One of the best ways to describe this volatility of U.S. equity market is to compare it to the rapids Jack and I encountered as we approached Benham Falls, the largest falls on the Deschutes River. We had started off on mild-mannered waters, but quickly had to paddle with increasing intensity to power our way upriver against the current. That’s when I discovered that while you think you can prepare for rapids, you don’t really know when they’re going to show up or how strong they’ll be.

Sometimes you hear different noises from the river, but it ends up being nothing. Sometimes you hear very little, and all of a sudden you are in a tumultuous portion of the river. While you are always on the lookout and think you are prepared, it is virtually impossible to be fully primed; and yet there is no way to avoid the rapids if you want to reach your destination. You can anticipate the rapids and prepare as well as possible, but when they come, you are still anxious. The one thing you cannot do is bail off of the paddleboard as this would guarantee you not reaching your destination.

Preparing for the rapids during the second half of your financial journey is about designing an effective retirement and distribution plan. Creating your financial hierarchy of needs as well as asset, and strategy allocation will help get you to your investment destination. Even so, the journey will not always be totally smooth. Rapids will be encountered and you will need to triumph.

When you observe the many economic challenges our country currently faces, I suggest asking yourself, haven’t we had some of these situations in one form or another for the past 50 years? Do you remember sitting in gas lines in 1973 during the oil embargo? Do you remember when inflation rose above 13 percent in 1980? Do you remember Black Monday in October 1987 when the U.S. stock market dropped 20 percent in one day? What about the dot-com crash shortly after 9/11? Then there was 2008, the worst year in stock market history.

These and many other financial rapids have been encountered on an irregular basis for half a century; I suspect we will continue to encounter rapids as we paddle down the river of our lifetime. As we’ve discussed, the worst move in the middle of rapids is to bail off the paddleboard. All too often, however, that’s exactly what investors do.

Much like changing your putting stroke right before the biggest putt of your life, individuals often abandon process and technique in the very moments when those are most important. Okay, I know I’m mixing my metaphors here, but the point remains the same. Relying on proven investment processes, as described in previous chapters, can help ensure that you safely navigate your way to your final destination.

Jack and I exerted much effort to reach Benham Falls, and then carefully turned our paddleboards around in the direction of the current. Our hard work and persistence of staying the course paid off. The rest of the journey was relaxed as we paddled effortlessly with the river, enjoying the Central Oregon scenery and making slight adjustments as needed along the way. Had our attitudes been different, we might have quit before reaching our goal or tensed up to the point where we could barely paddle. Instead, we went with the flow mentally even as we fought against the current physically. You could do a lot worse than adopting a similarly tenacious-meets-go-with-the-flow approach to investing.

David Rosell is President of Rosell Wealth Management in Bend. He is the author of Failure is Not an Option- Creating Certainty in the Uncertainty of Retirement.  You may learn more about his book at www.DavidRosell.com or Amazon.com. Ask for David’s book at Barnes & Noble and in Bend at Newport Market, Cafe Sintra, Bluebird Coffee Shop and Powell’s Books in Portland.

Investment advisory services offered through Rosell Wealth Management, a State Registered Investment Advisor.  Securities offered through ValMark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste 300 Akron, Ohio 44333-2431. 800 765-5201. Rosell Wealth Management is a separate entity from ValMark Securities.


About Author

David Rosell is president of Rosell Wealth Management in Bend. RosellWealthManagement.com. He is the author of three books. Find David’s books at local bookstores, Amazon, Audible as well as Redmond Airport. Investment advisory services offered through Valmark Advisers, Inc. an SEC Registered Investment Advisor Securities offered through Valmark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste. 300 Akron, Ohio 44333-2431. 800-765-5201. Rosell Wealth Management is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc. Valmark Securities supervises all life settlements like a security transaction and its’ registered representatives act as brokers on the transaction and may receive a fee from the purchaser. Once a policy is transferred, the policy owner has no control over subsequent transfers and may be required to disclosure additional information later. If a continued need for coverage exists, the policy owner should consider the availability, adequacy and cost of the comparable coverage. A life settlement transaction may require an extended period to complete and result in higher costs and fees due to their complexity. Policy owners considering the need for cash should consider other less costly alternatives. A life settlement may affect the insured’s ability to obtain insurance in the future and the seller’s eligibility for certain public assistance programs. When an individual decides to sell their policy, they must provide complete access to their medical history, and other personal information. Client name has been changed to protect confidentiality. The gross offer will be reduced by commissions and expenses related to the sale. Each client’s experience varies, and there is no guarantee that a life settlement will generate an offer greater than the current cash surrender value. RosellWealthManagement.com

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