Faith In The Markets...
Earlier this month on one of my trips to Denver, I was having a discussion with one of my advisors on faith, ideology, and how views differ in many ways for everyone. I am going to avoid any theological discussions, however, I do believe faith plays a crucial role in our daily lives and many aspects of it would not be possible without faith.
Although unnoticed for the most part, as professional pilots, we exercise our faith in many ways on a daily basis. We place our faith on the maintenance procedures of our respective carriers and we assume that our maintenance departments noticed that hair-line crack on one of the turbine blades and that it was repaired properly.
We place faith in our dispatchers to give us timely information, as well as the controllers to keep us and our passengers properly separated form other aircraft, especially on a departure or approach procedure while flying in IMC. Personally, my faith has certainly been tested many times departing out of PHL, LGA, or EWR, with the TCAS system exercising what seemed to be every possible aural command. Of course, as a crew, we exercised all avoidance procedures, and we had faith the controller was also doing his or her part to resolve any conflicts at the same time. Just another day on the job?...absolutely! Other than trust in your own abilities, if you don’t have faith in the system in which you operate in, why even bother spooling up the jets?
As an investment professional managing millions and millions of dollars on a daily basis, I have to have great faith in our financial system. If I didn’t, there would be no purpose for me to come into work each and every day. I cannot say that, over the last two years, mine has not been tested...many times. The Madoffs and Stanfords of the world stand out.
I do believe however, that these tests of faith are only on a macro level. I am a firm believer in and maybe even an optimist about our financial system. I don’t for even a second however, believe that our system is perfect. In fact, far from it. What our system is very good at however, is weeding out the bad.
I say this because regardless of the handful of such individuals named, our financial system is larger than most can imagine. It encompasses everything and nothing escapes it. From a broad perspective of our system as a whole, especially on a global level, I do have great faith that our financial system will always prevail no matter what is thrown at it. It is too deep and too complex to have a short term event derail it at any given point in time.
If you’ve ever thought about how everything is inter-related with everything else you’ll have been amazed at how deep our financial system really goes.
Unfortunately, most of what we see on a daily basis are short term and shallow events that in the long run don’t really mean much. They just cause a ripple in a large ocean. Sometimes, It just might not feel that way because the media is relentless when It comes to “the story of the day”. Jason Zweig in his book “Your Money And Your Brain” said, “Stocks are like weather, altering almost continuously and without warning. Business is like climate, changing much more gradually and predictably. In the short run it’s the weather that gets our notice and appears to determine the environment, but in the long run it’s the climate that really counts”.
As an investment professional, I concentrate on the climate. I may carry a jacket for warmth in early spring , but ultimately never forget that I won’t need it for long and that soon it will warmer. It just doesn’t seem that way during that one cold day. It is that one cold day in the markets that can help us lose our faith in our financial system. Keeping the proper perspective and keeping the faith is crucial on days like that. This I view as a large part of my job.
So here’s the take away...
Maintain faith and perspective. You’ll be amazed at the resiliency of our financial system and the power of the American entrepreneurial spirit on which it is based.
Alex A. Tapia, AIF ® President and Retirement Wealth Planner Aviation Retirement Strategies, LLC.