I love the 4th of July, not only because it is a reminder of the birth of our great nation, but also because of all the cookouts, parades, and, most of all, the fireworks.  Our family spent the 4th this year at the ballpark watching the St. Louis Cardinals (they won!).  After the game, they shut off the lights, cranked up the music, and kicked off an amazing fireworks show.  Watching the crowd clapping along and completely enthralled, it was clear that I am not the only one who loves a good fireworks show!

Mid-Year Report: More Fun, Less Fireworks

While fireworks are good on the 4th, they may not be as desirable in our financial lives.  In our investment portfolios most of us prefer great long term performance vs. our targets, goals, and objectives.  The first half of 2014 was a great start to the year and re-emphasizes the wisdom of consistently adhering to long term investment goals and ignoring the noise of world news and highly-compensated pundits who get paid to stir up fear.  Going into 2014 the popular predictions in the financial media can be summarized as: 1) Bonds would underperform, 2) Sell and avoid Emerging market stocks, and 3) Avoid interest rate sensitive funds  (like Real Estate Investment Trusts or REITs).  As it turns out 2014 has been great for bonds (up 3.9%), good for Emerging markets (up 4.7%), and stellar for REITs (up 18.2%).  Score 1 for disciplined, long-term financial plans, and 0 for short-term guessing. i.e. “Fireworks”!

Uncertainty creates opportunity so when it comes we should have made preparations to stay disciplined.   My colleague Destin Tompkins sent a great article from Jim Parker, VP Dimensional Funds, who pointed out that even if you had invested at the top of the market in 2007, you would still have enjoyed a 7% annualized return since.  The big losers were anyone who cashed out and sat on the sideline to wait for calmer waters. He also pointed out that at the market bottom in 2009, the AP ran a story that highlighted 5 reasons why the market had bottomed, and 5 more why it hadn’t.  Times of maximum uncertainty are often the best times to invest, especially as part of a diversified, efficient financial plan.

One last note: I have read a lot of stories about how Americans are struggling with finding happiness and balance in their lives as evidenced by the recent MSN survey that:

– Only 19% of Americans feel they do a good job of living in the moment

– Only 27% of Americans agree that they always prioritize relationships over financial success

At E|Financial Alliance, our mission is to help in some way to give you peace and comfort with a plan for success.  I hope you get some time this summer to be “in the moment” and enjoy good times with family and friends and the important relationships in your life. Thank you for allowing us to partner with you.

Mitch