Ranges | Wisdom, Wealth, and Wellness

Jonathan Satovsky
CFP®, ChFC®, CIMA®, CPWA®, CDFA®, DACFP

Good morning, good afternoon, good evening. Depending on the part of the world you’re in. This is Jonathan Satovsky of Satovsky Asset Management and on today’s episode of “Seeking Wisdom, Wealth, and Wellness,” I want to talk about why I hate statistics and averages.

No one is average. Everyone is on ranges outside of average. Statistics can tell any story or can mislead any story. So, you can say, “Look, the average
market performance over time is 10% a year.” Well, that’s true, but very rarely is it a static 10%, 10%, 10%, 10%. You can get up 20%, minus 20%, all sorts of ranges, and then the investor experience doesn’t ever end up getting that average because their behavior questions the efficacy of that average because they don’t ever achieve that average. When they’re doing better, they get more ebullient and contribute more. And when things get worse, they get a little bit more despondent and question their staying power and stamina, and they’re not able to stay still. So, averages really throw people off.

What people really need to focus on for expectation purposes is the range of possible outcomes. And so if you expect that the range of possible outcomes of the year, let’s say, with money, is that in a calendar year, you can see your money decline by 30% or up 50%. That’s an example. Or you can say, well, I might want to tighten that range. I don’t want that much volatility. I’m going to go minus 10 to positive 30, for
example. And the question is, can people live with that range? And do they change that range of outcomes every day?

Today, people might want to really tighten that range. During really good times, people want to extend the range because they only view the upside. They don’t think the downside is viable. So when you think the downside is viable, you tighten the range. When you think only the upside is viable,
you widen the range, but human behavior ends up miscalibrating that.

So, be careful of averages, get expectations centered around ranges, and you too will find a way to survive and thrive during the rollercoaster of life for the next chapter, whatever may come.

Have a great day.

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Video Recorded June 16, 2022
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Disclosures

This blog post is not intended to be, nor should it be construed or used as, an offer to sell, or a solicitation or offer to buy any securities or interests in any strategy offered by Satovsky Asset Management, LLC (“SAM”). SAM is a registered investment advisor with the Securities and Exchange Commission – for more information see www.adviserinfo.sec.gov. Please remember that different types of investments involve varying degrees of risk, and that past performance is not indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the strategies recommended or undertaken by SAM) will be profitable. Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison. The market volatility, liquidity and other characteristics of SAM’s portfolio composition are materially different from the securities listed on public market indices. Market index information was compiled from sources that SAM believes to be reliable. No representation of guarantee is made hereby with respect of the accuracy or completeness or such data. Opinions are as of date of video and are subject to change. A copy of SAM’s current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. SAM undertakes no duty to update information presented herein.

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