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 understanding. And can we understand something without experiencing it ourselves?
Well, I could use lots of analogies here. I’ll start with long-term investing. So, I was sitting with a client the other day and we went over their past, their current, and their future situation, and had a healthy conversation about expectations. They said, “How do you know things are going to be good in the future? Maybe they’re going to be bad.” I said, “I don’t know, but let’s frame it.” From December 31, 2007 through November 30, 2022, a period of the financial crisis in 2008, Brexit, COVID, and 2020’s quantitative tightening periods. Even with all of those periods intermixed, their equity portfolio of US and foreign stocks have averaged 7% to 8% a year.
7% to 8% a year.
So they can hoard cash. It was a conversation about cash at zero, paying off a mortgage at 3.75%, or investing. So it’s all about framing. If you’re going to keep money, earning a lower yield than your debt, you should pay off your debt. But if you’re going to invest and give yourself a chance to out-earn it, the understanding comes from having the experience to live through ups and downs and to know that bad things are going to happen. Yet in the long term, we persevere with optimism so that you can experience things and have greater compassion and perspective on your path to Wisdom, Wealth, and Wellness.
Have a great day.