A classic scene: Audrey Hepburn exiting a taxi in the early hours of the morning on a near empty 5th Avenue in New York City. She is going to end her long night looking in the window of her favorite store, Tiffany & Co. She’s nibbling at a pastry and sipping some coffee. Her outfit is classic: a black evening gown with an elegant overload of pearls and the style of over-sized sunglasses that every woman has owned at some point in her life. The only anachronistic thing about her is her 1961 beehive hairdo, but if you saw this woman walking down the street today, you wouldn’t notice her hairstyle. Audrey Hepburn is a vision as she walks through that scene — timeless, classic.
Iman once remarked, “In a world full of trends, I want to remain a classic.” Classics are classics. They are here to stay, for many good and practical reasons. Every man has that one suit that fits him like a glove; every woman has a little black dress that makes her feel gorgeous and unstoppable. When you wear a classic, you can never go wrong. Where you can go wrong is wearing bowling shirts, denim with denim, or baby doll dresses over leggings. We all have pictures that show us trying something new and trendy, something we thought was so cool. Got a match?
Trends don’t happen only in fashion, of course. Trends are everywhere — the car you drive, the phone you carry, the restaurants you frequent. Investments can also be horribly trendy: Crypto Currency, NFTs, Energy stocks, Technology startups. Do you really think that in ten years you’ll be as excited about investing in the latest electric vehicle as you are now about Tesla or the Rivian IPO? Pretty doubtful. By then these revolutionary vehicles will either be so commonplace they’re nearly invisible, or they’ll have been surpassed by newer and better technologies.
Of course, just because something is trendy doesn’t mean it is destined to fail. Amazon started off as a new way to deliver books. Now it’s an established and convenient way to buy almost anything. However, also consider the many leading-edge products that have fallen by the wayside over the years: Vinyl Records, VCRs, actual photographs, even digital cameras — all are either long gone or they’re niche products. When you’re looking at exciting new technologies or innovative products as places to put your money, tread carefully. While they might be doing well now, the chances of their quickly losing momentum are high, much higher than the chances that a traditional, boring, efficient company will suddenly fail.
Often, we talk with prospective clients who ask if we will be coming to them with new and innovative investment opportunities, like hot IPOs. We say no, we probably will not. We like to stick with solid, proven vehicles, the classics. While putting a small sum into this or that new idea is okay, the greatest part of our effort should be to accumulate and retain solid investments that we thoroughly understand, in companies that have shown themselves to be well-situated and well-run. They have staying power. The classic notions of diversification, indexing, balancing of stocks and bonds for risk mitigation, and holding assets for the long term — these still apply today, and likely they always will. They might not be what everyone is buzzing about right now, but they shepherd the kind of investing that has steadily built wealth for countless ordinary investors over many decades. We judge this to be the best sort of investing for our clients.
The coming year threatens to be a volatile one in the markets, just like many other years. Economists predict we won’t get the returns in 2022 that we got in 2021. What does that mean exactly? Are the markets going down or are they going to return 15% rather than 27%? No one really knows. It’s easy to get caught up in the hype about the latest and greatest, but your time is better spent reviewing your core holdings, re-evaluating your current situation, and then, if you wish, exploring other small pieces that can give your portfolio a bit of extra potential, extra spice.
If you’re not sure what your core investing style should be, then let us help you discover it. We can also help you reduce the noise and more objectively evaluate any new trends you’re afraid you’re missing. One Vision Retirement, Your Retirement in 20/20 Vision.