How to dissect economic outlooks…
When you hear or read an economic outlook, what you’re really being told is either what happened in the past or a guess about what might happen in the future. In fact, every economic outlook has a disclosure explaining that they don’t know what is going to actually happen next.
Catch phrases like continued volatility, uncertainty, and long-term growth are things said on many economic outlooks that sound good. While they sound like lingo used by folks in the know, these phrases ultimately don’t tell us what will happen in the future. These outlooks generally ignore essential factors such as underperformance risk and cash flow/sequence of return risk.
We believe the only real productive use for economic outlook reports is to marvel at an economist’s ability to explain why things just happened. It is interesting and sounds good but does nothing to help an investor plan their cash flows in the future.
At Affluent Capital Management, our advisors differ from traditional investment advice by guiding our clients on their cash flows and planning to help avoid risks. Our process balances life expectancy, fees, taxes, financial resources, and spending goals with the investment strategy decision. This process is designed to give you a high confidence level to live with confidence and purpose.
Unfortunately, some in the industry generally ignores sequence of stock market returns because it is not something that can be controlled or managed. In fact, sequence of stock market returns actually demonstrates that asset allocation and manager selections aren't the main contributors to overall investor success. Our advisors respect the uncertainty of the future and it is part of why we run thousands of model simulations to calculate a variety of outcomes for our clients. This helps to identify potential hazards and develop a strategy to plan for their aspirations and needs.
When you partner with Affluent Capital Management, our advisors manage your investments through education-based principles rather than trying to predict the future.
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The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. There is no guarantee that any strategies discussed will result in a positive outcome. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal.