Zen and the Art of Wave Riding
Much can be learned from the sea. Having spent many years on the beaches of Southern California, I know it well. Tides rise and fall, sometimes in predictable patterns, but often in uncertain ways, the force and power unparalleled. While various break walls and jetties can muffle the tide a bit, the highs and lows will prevail. Some patterns are lighter than others, some darker, but the yin and yang inevitable.
Knowledge coupled with intuition is essential, and it is important to never turn your back on the surf. The ocean’s force must be respected and taken seriously, but needs not be feared. The sea and the markets have many similarities. Both give and both take. Both require calm and a well thought out approach before entering. From my years as a securities analyst and portfolio manager, I believe the market volatility is something that should not only be accepted, but embraced with the proper approach and preparation. It not only keeps the market honest, but provides opportunities for each and every investor no matter how small or large. It is the great equalizer.
Another instance where we can learn how to better understand and manage the markets from nature is through seismic events. One thing I do not miss from Southern California are earthquakes. Smaller tremblors provide a way to relieve some pressure from the Earth, releasing force in a more controlled way, like removing the lid from a boiling pot of water. So as with the markets when there are smaller corrections. These corrections give the market time to reset valuations so that we can eventually move towards higher valuations. Moderate fluctuations are a healthy necessity for long term investors, giving the market the ability to let off steam and refocus.
Having your assets invested in a well thought out strategy, built with a rock-solid blueprint, that balances a top-down and bottom-up approach is a way to not only handle the waves, but to ride them in a way that meets your investment and wealth objectives on both a short term and long-term basis. Sticking with a plan, but allowing for adjustments along the way as market and personal circumstances change is also important. Proper advice and guidance and goal-oriented investing serve as a valuable compass when navigating the waves whether you are on a surfboard or investing in the market.
Blocking out short term noise and being prepared for the unexpected allows investors to do it with the comfort and knowledge that they are providing themselves with a level of protection. Breathing slowly and calmly accepting and embracing the heartbeat of the market while knowing why and how you are invested, is not only healthy, but essential if you are going to safely enjoy and take advantage of the ride. The life force, or chi, of both the sea’s currents and the market is formidable, but manageable and ready to be ridden with the right approach.
The foregoing content reflects the opinions of Advisors Capital Management, LLC and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.