Winter Is Coming


Winter can often feel like a cold, dark, lonely, and (especially in the midwest!) never-ending season. And while each inevitable winter can test our patience and our fortitude, there are also tried-and-true ways to prepare, and make the winter a bit more bearable. So, we asked ourselves, what if we took this preparedness mindset and applied it to our long-term financial goals? Read on to learn more about financial "Winter", and how can we best "bundle up" for its arrival.

Winter is Coming 

In the HBO series Game of Thrones, the protagonists of the show, the Stark family, are a northern family that live in a fictional world where the winter season comes along sporadically every few years instead of a predictable yearly occurrence. As these winters are often brutal and unknown in their timing, the Starks' unofficial family motto is “Winter is Coming” and they spend a great deal of time preparing for these unpredictable winters.

The obvious connection to investing and your financial plan is we too, have no idea when a bear market will occur in the stock market (a bear market is defined as a 20% or more drop). History tells us that since 1926, there have been 11 instances in which the S&P 500 ended a month in a bear market, an average of about once every 8.5 years. The most recent, of course, being the Great Recession from Oct 2007-Feb 2009, when the S&P 500 dropped by more than 50%.

Winter Is Coming Graphic

Now that we’ve established that bear markets are unpredictable in timing, length, and severity of returns, what then are we to do to prepare for our own investing "Winter"?  A couple suggestions:

  1. Figure out your personal risk level. Know how much risk you can tolerate. If the thought of losing more than 20% of your money causes your stomach to turn and curl up into a ball, then you better make sure you don’t have a large portion of your money in the stock market, because it will happen. Let me repeat – a bear market is going to happen at some point and the value of your investments in the stock market will likely drop quite significantly. If you know how much risk you’re taking before the market drops than you can avoid making the mistake far too many investors make, which is...
  2. Don’t make emotional decisions. Did you know that since 1988 the stock market has averaged an annual return of nearly 10% per year, yet the average stock market investor has only earned a little over 4% per year? Why the large difference? Simply put, we humans make emotional decisions, and quite often to our own detriment. We tend to panic when the market crashes and we sell, or we get overly excited when the market goes up and buy. Instead, think of your money like a bar of soap. To quote Gene Fama, Jr., a well-known economist, “Your money is like a bar of soap. The more you handle it, the less you’ll have.”
  3. Have a plan. Which brings me to my final suggestion, put a plan together and stick with it. If you have a long-term plan in place for your money, you’re now thinking about how your money does over the course of decades instead of over a couple months. With this new perspective, you’re less likely to make a poor decision based on a couple bad months when you know it’s not likely to have a huge impact on your long-term plan.

At Frontier Bank Wealth Management & Trust, we can assist you in building your financial plan and help you stick to it when Winter inevitably strikes.

Brad Lupkes

Brad Lupkes
Wealth Advisor




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