Now and Then

Now and Then

November 23, 2022

Now. It’s just a little word but one that can carry all kinds of action or even stress. Not later, now. Not when you have time to think about it, now. Can’t I just sleep on it? Nope, now.

While the word does carry action, it doesn’t seem to carry much grace or patience. I like those two words better, don’t you? Grace and patience help me to take a breath, giving me time to think about it. When acting in the now, we all can make mistakes or be shortsighted. And in this current environment, ‘now’ doesn’t feel very good for a number of reasons.

In 1965, The Byrds released a song titled “Turn! Turn! Turn!” In it, they sing how we as a people and world are in a constant state of change. That there is a time for dance, a time to mourn, a time for war and a time for peace. This song had so much impact when it was originally released in the 1960’s and yet I feel like it is evergreen as it hits the mark today as well. We are always breaking, changing, mending, learning. I believe the song makes several points, but in it I also hear perspective. Many moments must have then felt or today feel unprecedented, especially to each of the younger generations of the time. They call into question, how will this play out, will we ever see calm or peace? And then it turns.

Let’s put our thoughts about ‘now’ to the side for a moment, which leaves us with the past and the future. With the past truly behind us, its value comes when we use it as a guide to navigate to a better future. The future may sound better... we have time to plan and make improvements. But on the other hand, it is unknowable. It is always out front and carries with it many “what if” scenarios. Depending on our current frame of mind, that outlook can be optimistic or somewhat negative.


All of us as human beings fall victim to a common phenomenon called Recency Effect. The recency effect, stated most simply, is the tendency to recall the most recent information most clearly. That makes sense, it is easier to remember what I had for lunch today versus recalling what I had for breakfast two weeks ago. In investing, we call it a recency bias. With a similar line of thinking, recency bias is our tendency to take what has happened most recently - markets going up or markets going down - then project that to continue in the future. We see this all the time. When markets have gone up, there is a psychological bias in believing it will continue. When this really takes hold, we have sometimes experienced large bubbles of appreciation. This can happen in stocks, real estate, commodities like gold or in digital cryptocurrencies. When this happens, we often hear phrases like, “Real estate can’t lose” or “Gold is going to $5,000 an ounce!” Until it doesn’t, and those assets then retreat in value; sometimes with very sharp and swift declines.


Similarly, this happens to markets going down. When this happens, like what we have experienced in much of 2022 thus far, it can feel like it will continue indefinitely. Negative begets more negative - until it doesn’t. This is why with investing, recency bias can really be dangerous to our investment or financial planning.


Where am I going with all this? Recency Bias happens not in the past, not in the future, but right now. I am all for living in the now, smelling the roses and all of that, but most of our planning is about the future. Your investing isn’t for today, it is for the future. And lastly, your legacy to your loved ones, while lived out day by day, will take place in the future; perhaps decades from now through the life of your kids, grandkids and other family. One of my favorite quotes on this topic comes from Ian Wilson, former chair of General Electric. He stated, “No amount of sophistication is going to allay the fact that all of your knowledge is about the past and all of your decisions are about the future.” This takes my mind right to investing and your plan.


Clients have heard me say over the years that I believe we have three roles as your advisor. The first is as a teacher. Here we help to educate you about the limited resources of time, energy, and money by providing straightforward information and experienced perspective. We inform, so you can make meaningful decisions based on how your wealth affects the impact you wish to make in your current and future life.


Second, is Coach. Here, through our planning exercises, we discuss and discover how you can be in position to achieve your goals and minimize the impact of your concerns. We discuss who you want to be, what you want to do, and where you want to go. We help you to breathe life into your goals and then develop the strategies and the necessary plans to help you live it all out.


Third, is Advocate. Truth be told, this is my favorite role in serving our clients. Here is where we are able to help propel and encourage you to explore your future and what’s possible. Retirement, travel, hobbies, family, faith and legacy- this is what all the planning is about. At this level, we want to help you answer the question, How will the last 30 years of your life impact the next 30? Most of all, we wish to instill confidence in you, knowing that we will navigate the future’s changes and events together to help you achieve what’s possible.


To close, a quote from one of our mentors. He frequently stated, “it’s good to live in interesting times!” What’s so interesting about this statement is that it really can fit many situations. So whether we recently experienced a wonderful blessing or perhaps something less desirable, it is important to know where you are today and that the future will change; often for the better. As it does, we will be here to discuss and help you navigate each step of that journey.