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Routine and Discipline

School started last week for my youngest and this week for my oldest.  Although my husband and I both work outside the home and we still had a schedule, routine and discipline were definitely lost as popsicles became more of a staple than a treat and bedtime became coming in from the outdoors at dark.  We enjoy summer as there is more time with family, friends and neighbors, more time for adventure, the sunlight feels so good and allows us to easily get outdoors, and there is no talk of homework.  I would say a good term for the feeling is a “summertime lullaby.” 

I recently read this term “summertime lullaby” when describing the market euphoria that has become much discussed during the summer of 2017.  Last week, the DOW hit an all-time high and posted its eighth straight record close.  US equity indices have been on a tear lately and volatility…well, what is that again?  You can read articles ranging from this is only the beginning and the sky is the limit to the opposite end where the sky is falling and buy gold now.  The media reporting on investment news can make your head spin. 

Routine and discipline.  There is something sweet about a summertime lullaby or euphoria.  Recent market performance with muted volatility can make investing feel really good, can make your appetite for risk grow, can make you want more.  Higher market returns seem to become more of a staple than a treat, much like popsicles for my kiddos this summer.  Recency bias kicks in and it seems like this is how it is.  Your mind can look past the lessons learned in 2008, can make you forget what losing money at a steeper than typical clip felt like.

So I ask you to pause and think about what it would feel like to lose 5% of your investment value?  10%, 20%, 30%?  What would you do?  And most importantly, with recent market gains, are you allocated appropriately to match what you can stand to lose?  Would you have the discipline to stay the course in a downturn?  Are you able to still meet your goals?  There is something wonderful about a summertime lullaby, but no different than with children, it is in the thick of routine and discipline and more challenging times when real gains are made.  Remember your plan, the goals you are trying to meet, the annualized return over the long-term you need to earn to make those goals look realistic.  Enjoy the summertime lullaby while keeping routine and discipline as your underlying tenets.  

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