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100 Year Floods

| June 03, 2019
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"A man who views the world the same at fifty as he did at twenty has wasted thirty years of his life." - Muhammad Ali

The sequence and timing of events can have a huge impact on how those actions feel versus how the "numbers" play out. Take rain for instance. Much of the Central part of the US is seeing flooding, and flood conditions. No one is above their average annual rainfall numbers, and many are barely above "normal" rainfall for this point in the year. However, the timing and sequence of repeated storms in a short period of time has created real issues for many people and towns, unfortunately. They can be referred to as 20-year floods, 100-year floods, or even 500-year flood levels. It is because on "average" the water will only flood to that level once every say 100 years. That does not mean it can not happen more often during a period of time, and less often at other times.
The stock market indexes saw declines in May; we have had several weeks (six to be exact) of declines in a row. That is a sequence which stands out, we have not matched that sequence since 2011. Yet the markets still ended May about 10% higher than they were January 1. We see or "feel" the impact of this sequence more strongly because it is more rare. If flooded water levels start approaching your house, you start sandbagging – but you don’t sell your house. There are times to make small “protective” changes in portfolios for similar reasons. Yet, selling everything is rarely beneficial to your long-term financial success, or in other words pursuing your personal dreams and goals.

Stay safe in this extended storm season, and may the rising waters begin to subside.

*You cannot invest directly in market indexes, and past performances is no guarantee of future returns.

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