Six years ago our expectations were for 3% GDP growth in perpetuity with double digit stock market gains and early retirement for everyone as they gradually unloaded their real estate holdings and checked into the Club Med. Obviously, those expectations were flawed. Nobody saw the Financial Crisis and the Great Recession coming. Hindsight is 20/20 and it’s painfully obvious today that the real estate bubble had to pop but it’s impossible to see the future clearly whether you’re standing at the beginning of a boom or the beginning of a bust. Nothing worked out the way we thought they would. In my experience, very few things do.
Some people have lost hope because their plans for the future have changed. I’m not one of them. We can’t control how Congress or Central Bankers or the financial markets behave. But we can control our behavior. We can choose to be pragmatic, to make adjustments, to plan the best we can with the cards that are dealt to us, to have hope.
We choose how much risk we are willing to take by designing our asset allocation. We populate that allocation with the best components in each asset class. Then we remain calm and maintain our long-term perspective. I wouldn’t be surprised if we’re in for better economic growth than is currently anticipated. Expectations are so low just about any positive bump would exceed them. Maybe this will be the best fourth quarter and Christmas season for consumers in years? We’ll just have to wait and see.