Last summer I wrote an article in the Kids and Pets issue of WKL along with a picture of our backyard farm animals. The golden retriever in that picture was named Kirby. By the time the article ran, Kirby had passed away at the age of 11. Kirby was the definition of unpredictable. He could inhale an 18-count bag of hamburger buns in seconds. Over the years he ate siding off our house, glass, rodent poison, our kid’s cherished childhood stuffed animals, and packages left on the front porch. Kirby was unpredictable in his mischief, yet quite consistent.
The unpredictability of life forces us to make plans. In a COVID-19 world, the future sure seems less predictable than it has at any point in the recent past. However, ask yourself, has the uncertainty of 2020 changed your financial goals? I would guess the answer would be, “no, not at all.” The commonality in most financial goals is that they generally have a certain time period (retirement, wedding, college, etc.). When we combine an unpredictable path with a fixed point in time, we need to plan well to be successful. Complicating things further, the framework around how we plan and make decisions is typically flawed to some degree. Former Chairman of General Electric, Ian Wilson, summed it up well by saying, “No amount of sophistication is going to allay the fact that all of your knowledge is about the past and all of your decisions are about the future.”
Planning requires us to face the facts that the near term is unknowable and that we are slowly running out of time to achieve our goals. If we want our money to help us fulfill our goals, we need some of it invested in things that can grow in value. Investing money in great companies may be the only way to achieve that growth, especially when interest rates hover near zero. For sure, there is uncertainty about investing. However, pull up a chart of the US stock market over the past few decades and ask yourself if things really look all that uncertain when viewed over a longer timeframe. As investors, we plan to hold our great companies when chaos arrives and buy even more of them when prices fall. We plan to live off cash reserves or other conservative investments when we need to wait out the chaos (COVID-19, financial crisis, tech bubble, etc.). Successful investors focus on the plan, not the unpredictability of the experience.
Late last summer, we brought home Moose (a Bernese Mountain Dog puppy) from a farm in Pennsylvania Amish country. Moose loves to eat socks, chase bugs, and herd the pig and backyard chickens (which they hate, as you can imagine). To date, we have focused our dog training on getting Moose to be a well-mannered dog and have not the slightest clue about teaching a dog to herd something. He just knows. However, herding skills can be refined. This would require a plan, discipline, and repetition. Our financial goals require the same.
At PYA Waltman, we help our clients focus on their plan, and less on the chaos of today. Our COVID-19 response was to humbly admit we did not know the future but to be opportunistic by selling things that traded at high prices and investing in great companies that traded at lower prices amidst the panic.
The opinions expressed are those of PYAW’s Investment Team. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed.
PYA Waltman Capital, LLC (“PYAW”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about PYAW’s investment advisory services can be found in its Form ADV Part 2, which is available upon request. PYA-20-45