ARBOR OUTLOOK: The long-awaited arrival of next year
“It is frequently noted that Wrigley Field is lovelier than the baseball often played on the field.” George Will
At the time of this writing, the Cubs, in their first World Series appearance since 1945, are deadlocked with the Cleveland Indians at one game apiece in the World Series. Should they win, it would be their first World Series title since 1908 — a mere 108 year drought. While I haven’t been around quite that long, to many from my old neighborhood on Chicago’s northwest side winning this year’s World Series would be a dream come true.
I remember a time when a childhood friend rode the city bus along with my family to Wrigley Field. Before game time, Ernie Banks walked by our row sporting a beautiful blue mohair sweater. Instinctively, my friend reached up and plucked some wool off his garment and stuck it surreptitiously in her pocket. When she got home, she placed that little piece of fluff in a box and only brought it out when she really wanted to impress.
Owning a small part of the sweater of Mr. Cub was valuable to her. Would it bring any money on the open market? No. Was it important in itself to anyone besides her? Again, no. But to my pal, that piece of wool reminded her of an emotional connection to the greatest Cub of his era.
Our relationship with money and investments can also harbor some of this same emotion. We may hesitate to sell shares in a certain security because of how we came to own them. Perhaps the stock was a gift from a grandparent or parent. But what we should probably keep in mind is that the gift was intended to help us financially, not to connect us long-term with a particular security. If it is wise to sell it, the giver will usually understand.
As has been so often said, stocks and bonds have no feelings and are unaware that we own them. We may have an emotional connection to them, but it’s a one-way street. We may think to ourselves, “How will I feel if I sell this stock?” But the larger question we should ask is, “How does owning this security contribute to my ability to achieve my long-term financial goals?”
When people plan for their retirement they often engage in what is essentially a values clarification exercise, which is a qualitative procedure. They are defining their life’s aspirations, which may include caring financially for a child, achieving a certain quality of life in retirement, or enjoying the opportunity to travel. But the securities they choose to shape their portfolio and achieve these aims are quantitative decisions and should probably be decided upon in unemotional fashion.
Margaret R. McDowell, ChFC, AIF, author of the syndicated economic column "Arbor Outlook," is the founder of Arbor Wealth Management, LLC, (850-608-6121 — www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin.