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Opportunistic Investing

Posted by John Posey

Ever heard the saying, “Close only counts in horseshoes and hand grenades”? I’m going tell to you close also counts when it comes to investing cash opportunistically. The best times in history to invest in stocks for the long term have come during significant declines in the equity markets – at times when many are fearful and unwilling to take the risk. I can relate to the uneasiness of investing in highly uncertain times because it generally doesn’t feel very good and rarely does it feel instinctively wise – I mean what if the market goes down even further and this is the worst recession we’ve ever seen! That’s always a possibility we have to live with. You must accept you’re probably never going to catch the bottom – just throw those horseshoes and hand grenades and try to get close! Before you make that investment in the moment you may be thinking, “What am I, some kind of moron! Everyone else is running for the hills!” Just having the sense of mind to consider investing cash in volatile times gives you an edge. Many would never give it an ounce of consideration and might even equate the thought to a mental illness.

Some of the best investments I’ve made have come at times when I really didn’t feel good about it, but I followed the old Warren Buffet saying, “Get fearful when people get greedy and get greedy when people get fearful.”

In past experiences, I wasn’t feeling too greedy in the moment, investing cash while the markets were experiencing double-digit percentage declines with no certain end in sight (by the way – there never is a certain end in sight in these moments). It takes guts, gritting your teeth, and most importantly the understanding that it might not work out very good in the short term - it could be years before you see a material payoff. You have to have DISCIPLINE. Financial discipline equals financial freedom. That’s why I would not opportunistically invest more cash than I feel I could afford to be without in the short run. I should mention, this idea isn’t for everyone – it’s only for those that are patient and disciplined enough to eventually reap the reward. If you don’t lean into a discipline equals freedom mindset, don’t even try it. If you would often consider yourself an impulsive or reactive person when it comes to your financial affairs, throwing horseshoes and hand grenades would not be an advisable strategy.

Now before you start sitting on piles of cash waiting to pounce on the next major market correction, you should know a few things. Never suspend or give up on automatic and systematic savings plans, like regular retirement plan contributions, for the thought of being able to market time your way to better results – it’s highly unlikely to work well with consistent success so don’t bother. Opportunistic investing opportunities can come and go pretty quick, and if you’ve seen The World’s Worst Market Timer video, you know timing just doesn’t matter that much over the long term. Market timing may not move the needle much if at all for most of us, but disciplined, systematic savings and investment plans coupled with sheer TIME absolutely will. The effect of time and compounding cannot be overstated. You’d be wise to always have it working in your favor in the form of routine savings habits while you’re in the accumulation stage of your life. For those in retirement, your horseshoe and hand grenade throwing days may be behind you, but it can be helpful to keep this concept in mind. Your situation may afford you some additional opportunities on occasion and the wisdom could be useful to the generations coming up behind you.

In short, throw horseshoes and hand grenades at market declines with cash to invest when you prudently can based on your own circumstances, but don’t forgo your systematic investment plans to do it. Give your investments time, patience, and discipline and reap the rewards – the freedom. It’s simple, just not necessarily easy. Put the systems in place – automated savings and investment plans -  to make it easy.  

 Happy investing.

Advisory services offered through Plains Advisory LLC, an investment adviser registered with the State of Nebraska. Insurance products and services are offered and sold separately through John Posey, a licensed insurance agent. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Any information provided is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal, tax, financial or investing advice and cannot be used to avoid tax penalties or to promote, market, or recommend any plan or arrangement. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.