What We're Thinking: Staying the Course-- It's Not Easy or Passive

When Jack Bogle founded a mutual fund company in 1975, he named it after Lord Nelson’s flagship HMS Vanguard. In the epic 1798 Battle of the Nile, Nelson’s British fleet was victorious over the highly-regarded French. To this day, the Vanguard culture is replete with maritime metaphors. A popular one is to "stay the course."

If you’ve listened to Jack’s comments during his lifetime, you’ve undoubtedly heard him use the phrase “stay the course.” It sounds simple enough and easy to apply. It isn’t. That’s because it almost always gets mentioned during troubling times and terrifying down markets.

Jack has been gone from this Earth for over a year. But I’m sure if he was still here, he would have been invited on by CNBC during this pandemic. In his calm, low-key manner, he would have said something like, “Well, we’ve had turmoil many times before, and for a lot of different reasons. We’ll have it again in the future. But the record is crystal clear. If investors just stay the course, they will be well rewarded.”

Implicit in this is, you must have a course to stay!

You must know, ahead of time, the acceptable range for your asset allocation. You must act if its guardrails are violated and rebalance back into the acceptable range. This is emotionally difficult.  It feels like selling some of what seems safe and shoveling it into an incinerator. Trust me. I’ve been there. I know the feeling.

Warren Buffett puts it a little differently, but with equal impact: “Success in investing doesn’t correlate with I.Q. once you’re above 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble.”

Staying the course is an active, engaged process that you control. It might feel awkward and uncomfortable. That’s the short-term price we pay for the long-term results your financial plan is designed to achieve. Jack also said, “Just press on, regardless.”

The Great Pandemic of 2020 is our Battle of the Nile. The smoke, the noise, the pain and suffering, the distractions and confusion of battle might tempt us to abandon rules-driven, evidence-based strategies.

We’re staying the course. We’re pressing on, regardless. We encourage you to do the same. And all the while, we stand ready to render guidance and assistance.

Jim Cosgrove, CFP, Plano, TX             jim.cosgrove@verizon.net      972-489-0262
Jim Cosgrove, Partner, San Jose, CA   jimcos42@gmail.com             408-674-6315