Expectation Management | Wisdom, Wealth, and Wellness

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

History. Why does history matter? It’s funny, you know the phrase, “past performance does not equal future returns,” but history gives you some context and expectation management.

This is Jonathan Satovsky of Satovsky Asset Management and on today’s episode of “Seeking Wisdom, Wealth, and Wellness,” I want to talk about expectation management.

I’m going to zoom in here to see if I can get really close to show you these data points. This is the history, though it only goes through 2015, so it’s a little bit of an old chart, but it’s still relevant today. We have a history of different colored lines. We’ve got inflation being charcoal. Green is 30 -day T -bills. Orange being five-year fixed investment. Orange-ish red being long-term government bonds,  gray being a balanced portfolio, light blue being large-cap US stocks, and dark blue/navy blue being small-cap stocks.

Okay, so if you sat still for 70+ years, $1 would turn into $27,000 in small companies. So why doesn’t everyone put all their money into small companies? Well, the yo-yo and the volatility will cause people to shoot themselves in the foot. What we’ve learned is the average investor, ultimately left to their own devices, earns the return of inflation, which historically has been 2.9% a year or over 70 years,  $1 turning into $13. So of course it goes from $13 up to $27,000 and a balanced portfolio like a 60/40 portfolio, ends up at $2,314. So, I say, “Well shoot! I’d rather have $27,000 than $2,300” and of course one of my esteemed colleagues said, “You know what? Isn’t it better to get $2,300 than $13?” And that’s what the advisory business is all about! It’s about helping people get on a path that they can stick with to survive and thrive. Enjoy!

Have a great day.

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Video Recorded February 7, 2024
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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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