“Tell me what we should do next.”
It was a simple request and one that needed some complex thinking if we were to give a clear answer. Here’s how we answered it…
When we bring advice to help you get where you want to go, it’s driven by a desired future state, a vision for the future. Specifically, your vision for the future. When we’re clear on that, along with the values you apply in your decision-making, we have some understanding about the kind of experience you want managing wealth.
We’ve mentioned a fellow by the name of Howard Marks before, he’s a very bright thinker in the financial world and when he speaks, people listen. In addition to our own analysis, research and thinking, Howard is a voice of reason we include along with a few others, and here’s a simplified version of a simile he offered recently.
Think about games. Chess is a game where you know all the facts, and that makes it a game of strategy. You know where all the pieces are, you know how they can move, you know who’s turn it is – the facts are clear. Success will be driven by your attentiveness and your strategy.
Poker, however, is a different kind of game. You only know some of the facts. You know what cards you have and what cards have been played, and everything else is based on probabilities. There are some strategies that can help, but the “unknown” makes it difficult to predict an outcome.
Our current market is like playing poker blindfolded. You don’t know who else is at the table, how many cards there are, what’s been played or what’s likely to happen. There are very few facts and it is almost impossible to make smart, strategic moves. At the same time, there are people who are “making money” in the markets right now. We put “making money” in quotes because it remains to be seen what will happen next. Technically, those people are still at the poker table, so they haven’t won anything yet, not until they stop playing. But luck has allowed some people to end up with more chips in front of them than others.
How do you win in a game like blindfolded poker? You don’t.
So, what can you do? It comes back to your plan. If you’re going to make changes, make small changes – this isn’t the time for big bets. Make decisions based on the context of your plan, not the news you’re hearing online, and seeing on screen. Your plan points to the answer for, “What should I do next?”