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Invest Like a Goldfish

 

By Morgan Christen
CFA, CFP, CDFA, CEO and CIO

 

I started playing tennis roughly five years ago, and now it has become a bit of an obsession. When I started, my athleticism got me through the match, but over time I began to focus on adding skills. Not only skills like hitting and ball placement, but the psychology of tennis. You need to learn to be a goldfish. As Ted Lasso said, the happiest animal on earth is a goldfish. “You want to know why? 10 second memory.”

 

Playing tennis, you can completely blow a game, but you need to wipe it from your memory and not let it jumble your head. You have more games to play.

 

Game. Set. Match.

 
 
   
 

Coming out this month is a Roger Federer documentary, called: “Federer: Twelve Final Days.” For those unfamiliar, Roger has 20 major titles to his name and is ranked as one of the best tennis players of all time. Judging by his statistics, Roger was a goldfish because he did not focus just on his games. He kept his head and focused on the match. Throughout his career, Roger only won 58.1% of his games. He won 75.8% of his sets and a whopping 81.9% of his matches.

 
 
   
 

 
 
   

 
 
 
   

Successful investors act like goldfish. Looking at day to day, and month to month moves can cause investors to derail their plans. Instead, investors should focus on the long term. As the chart below shows, the worst one-year period has been a rather large downturn of -43.3%. On the flip side, the best one-year period was up 54%. What would Roger do? Start thinking about winning sets, like: “how do we look in five-year periods?”

 

No need for Dramamine, as the worst five-year period was -12.5% and the best was 20.1%. But the match point is won over the long run. Looking at the 20-year time horizons, the best 20-year stretch was 17.9% and the worst was positive 3.1%.

 
 
   
 

 
 
 
   
 

Not only do successful investors look to win the match, they also do not leave early from the game. As the chart shows, missing just a few key days in the market can dramatically impact your net returns (pun intended). Going back to tennis, the number one strategy in winning is to “out-rally the opponent.” The goal is to win by keeping the ball in play, making consistency the key ingredient.

 
 
 
   
 

 
 
 
   
 

Roger said, “You play the ball. You don’t play the opponent. Be free in your head. Be free in your shots. Go for it.” Successful investing is making your plan and playing your game. Head down and focus on what you can control. You are in control of how you play, and we will continue to assist you in winning the match.

 

We look forward to speaking to you. In the meantime, if you have any questions, please contact us and we would be happy to talk. Enjoy your June.

 

Enjoy your June.

 
 
 
   
 

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DISCLOSURES: Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Stock is the capital raised by a corporation through the issue of shares entitling holders to an ownership interest of the corporation. Past performance is no guarantee of future results, and there is always the risk that an investor may lose money. Diversification neither assures a profit nor guarantees against loss in a declining market. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice. Federer statistics.