Wurstfest Veteran’s and Wounded Warrior Appreciation Event and Market Losses

Wurstfest Veteran’s and Wounded Warrior Appreciation Event

Our firm has been instrumental in organizing and contributing to a program during Wurstfest in New Braunfels, an annual German festival which has become a Texas institution, to raise awareness (and capital) for wounded warriors through two 501 (c)(3) organizations with whom we are involved. Because of the growth in interest and participation, the event has moved to a larger venue on the grounds of Wurstfest. Furthermore, the planners are seeking to include all veterans in this year’s program, in addition to wounded warriors.

For those who are in the Central Texas area, please consider joining us on Tuesday, November 11th at 7:30 in New Braunfels, Texas to celebrate and show our appreciation for all veterans, including wounded warriors who will be in attendance from San Antonio Military Medical Center (SAMMC).
The program will honor each of the armed services, and will conclude with a memorial to those who have fallen. Thanks to all who have supported these extraordinary Americans in the past – we believe it’s so very important to continue to thank our heroes in uniform, past and present.

Do Losses Matter?

Everybody who told us that the market drops earlier this month wouldn’t last can now claim that they were, in fact, right. However, when the markets dropped and became volatile, there was no way to know how long or how low the downswing would persist. Staying the course turned out to be exactly the right strategy in this case, but that doesn’t mean that we shouldn’t be concerned about downside risk.
You hold on because no living person knows when the stock markets will recover, but history tells us that, so far, they always have recovered, and eventually deliver returns that are higher, on average, than the returns you get when your money is safely stored under your mattress. We are required to remind you, however, that past performance is not an indication of future performance. That all said, regardless of our history lesson, it remains important to pay attention to downturns because the further your portfolio falls, the harder it is to recover.

There’s actually a rational reason why you tend to fear losses more than you enjoy your gains. The mathematics show the asymmetrical effect of losses vs. gains. If your $1 million portfolio loses 10%, falling to $900,000, then it requires an 11.11% gain to get you back where you started. It doesn’t seem fair, but that’s how it is. A 20% loss requires a 25% gain, and if your portfolio were to drop 40%, you’d need a subsequent 66.67% gain to climb back to your original $1 million nest egg.

Chances are, you know how we fortify portfolios against losses: we maintain separate “buckets” of funds to meet your short- and medium-term needs which do not have equity market exposure; and, for your long-term portfolio, we include a diverse range of asset classes, including bonds, equities (US, international and emerging markets) and alternatives (real estate, natural resources and hedge fund type strategies – also known as “smart beta”). All of these different movements tend to have a calming effect on the portfolio’s returns, not always in every circumstance, but fairly reliably over time.

If you can somehow avoid the worst of the market’s falls (even if it means not beating the market during the up-cycles), you raise your chances of long-term success. If you can do this and remain invested through periods of uncertainty like we experienced earlier this month, chances are you’ll enjoy better long-term returns than many of the experts you see encouraging you to actively trade your portfolio in reaction to market movements in either direction.