This past Christmas, my two oldest sons got an 8 foot foam surfboard. Last fall, my wife found an amazing deal at Sam’s Club and bought it for them. I don’t know who was more excited on Christmas morning, them or me. We all have been looking forward to catching some waves on this bright yellow 8 foot surfboard for the past 6 months. In mid-July, we went on a family vacation to Atlantic Beach for a week and were able to use the surfboard. Prior to entering the ocean to attempt to catch some waves, my sons and I talked about the fundamentals of surfing. We practiced the right form. We practiced popping up. We focused on the right footwork. We had a game plan before we entered the water. Finally, we went out in the ocean with the 8 foot surfboard we call “Bright Banana”, and we positioned ourselves to catch waves. Both of my sons were able to ride a number of waves during the week, and they had an absolute blast. They experienced all the emotions – fear, euphoria, confidence and apprehension throughout their time in the ocean. There were doubts, fears, falls, but the majority of the time it was smiles, laughs, and a lot of joy as they were able to surf and accomplish their goals.There were small waves, medium waves, and big waves that week. There was even a day where there were no waves – it was completely flat. There was a day when the weatherman said it would rain all day with thunderstorms. It actually turned out to be a beautiful afternoon, and we were able to surf. Had we listened to the forecast and decided that we would leave the beach we would have missed out.One afternoon, my oldest son was struggling to stay on the board as the waves were bigger. He kept falling off when he would stand up due to his balance being disrupted by the power of the wave. The frustrations were mounting. He wanted to quit and expressed this to me in no uncertain terms. I was able to calm him down, and we were able to talk through what was happening. I gently reminded him about the basics, revisited our game plan, talked about how to stay balanced on the board, and encouraged him. He ended up riding a wave that was his best ride all week. Had he given up and gotten out of the water, he would not have experienced that amazing ride.
Before my sons jumped on a surfboard, they spent some time learning and practicing the basics. This was important when we got in the ocean and started to experience the waves, some of which were rough. Being able to go back to the basics allowed them to not give up or get out of the water due to fear or worry. Solid financial advisors teach the fundamentals on the front end and help clients understand these principles - the importance of diversification, asset allocation is the key driver in determining portfolio results, the importance of rebalancing (buy low, sell high). Not only does a solid financial advisor take the time on the front end of working with clients to explain this, he or she will remind clients about these key factors throughout the investment process.
My sons realized they had no control over the surf reports, the type of waves that would be there each day, the weather, or what was going on around them. They could focus on the fundamentals. What they could do is position themselves to catch the waves that came and to be ready when they came. They could paddle and pop up. They could position their feet on the board to obtain balance. With regards to investing, solid financial advisors help their clients focus on what they can control such as defining objectives, developing a plan, utilizing low-cost, tax efficient asset class funds, diversifying the portfolio, rebalancing the portfolio, and staying disciplined and sticking to the plan. As Philip Moser of DHGWA said so well in his blog “Five Things the San Antonio Spurs Can Teach Us About Investing,” “A good advisor will help you design a plan that fits your specific tolerance for risk and has your goals in mind. Any advisor worth their salt will have a philosophy and stick to it regardless of what is popular in the financial media. A good advisor, will not be enticed by all the latest investing fads, but will ground their advice in empirically proven, peer-reviewed, academic research.”
We are bombarded with commentary and predictions in the media about what is going to happen in the market, particularly in the short term. These predictions and news reports are usually much more negative than positive. You will hear a lot of reasons why you shouldn’t get out in the water today, because some huge waves and thunderstorms are coming. You will hear people say it is time to get out of the market or it is time to do this or that. Scientific and academic research has proven that security selection and market timing do not determine portfolio results. Most investor’s time, energy, and money should be spent on Asset Class Allocation instead. Again, a solid financial advisor will stay disciplined to the game plan and not get caught up in the “hype” or in the “doom/gloom.”There are a number of parallels as it relates to surfing and investing, and others have written articles on this topic that illustrate viewpoints much different than the ones presented here. For me, I had Christmas in July. I was able to witness my sons catching and riding waves and embarking on hopefully a lifelong journey of surfing. It reminded me about the importance of fundamentals, the importance of “getting out in the ocean and off the beach,” and how important it is to focus on what you can control. There were some “rough spots” during the week in their pursuit of learning how to surf but as the week progressed their concerns subsided and their smiles got bigger. Enjoy the remainder of your summer. As you think about your investments and experience both good times and occasional rough spots, remember to focus on what you can control and go back to the basics of diversification, asset allocation, and rebalancing.
Webb joined DHG Wealth Advisors as a Financial Advisor in May 2011 in the Greenville, NC office. Webb also works in the Norfolk, VA office of DHG Wealth Advisors. He works with individuals and families in the areas of retirement planning and also helps businesses with corporate retirement plans.
Webb has the Chartered Retirement Plans Specialist® designation from the College for Financial Planning. He has more than 20 years’ experience in investment banking, banking, and various entrepreneurial ventures. Prior to joining DHG Wealth Advisors, Webb worked for a business with multiple portfolio companies, and for a community bank in Eastern North Carolina where he focused on investor relations, corporate communications, and marketing.
Webb grew up in Kinston, NC and graduated from the University of North Carolina at Chapel Hill with a degree in Health Policy and Administration. He also played on the University of North Carolina at Chapel Hill Varsity Basketball team. He is the co-founder of Called2Business, a marketplace ministry serving the men and women of Greenville and Eastern North Carolina. Webb also serves as a volunteer leader/huddle coach for FCA, a Young Life Committee member, and a board member for the Covenant Leadership Association.