OnPlane Financial Advisors
Do Well. Be Well. Financially.

Blog | Fee Only Certified Financial Planner Washington DC

I like to write about what happens in our lives and how it can relate to our financial lives. Not always but most of the time. So keep checking in. I'm glad to have you reading along.

Riding The Waves

Note: this post appeared on my previous blog and was published 10.25.2017

I love the ocean. Being a kid at heart, I still love to ride the waves, too. Bodysurfing. Boogie boarding. I just love it. There's just something about catching an awesome wave, the rush. Maybe it's little bit like flying, if we knew what flying really felt like.

Our kids are getting older and they love the ocean, too. It fills my heart. And now they're getting big enough to ride the waves and bodysurf with Dad. It's amazing, really.

This summer I was watching our youngest son, Sutton, bodysurf in the ocean.

You see, Sutton - he's only 5 years old. He hasn't yet realized he doesn't have to ride EVERY. SINGLE. WAVE. Seriously. He tries to bodysurf every wave. He catches a wave, hops up, looks and sees another wave coming. So he rushes back out and catches the wave. And then he does it again, and again. This goes on for about 10 minutes. Maybe longer. Basically until he's out of gas.


He has zero care in the world whether the wave he's trying to ride is a little wave, a medium wave, or a big wave. He wants to ride ALL of them. And he doesn't care if the big wave crashes on him and sends him tumbling. He gets back up, looks, sees another wave and rushes back out to catch it.

I, on the other hand, am a bit more discerning with my wave selection. I know the small waves won't be big enough to carry me in toward shore. And I know the bigger waves pose a wee bit of an injury threat for a 41 year old, so sometimes I pass on those, too. Sadly, I end up missing out on some really good waves. Like, REALLY good waves.

In the investment world, this is called Market Timing. Simply put, market timing attempts to capture as much of the positive returns a market offers, while selling some/all of our investments prior to a market decline.

Friends, this is a failed strategy.

For starters, see Luck vs. Skill. We are attempting to predict when a market will either go up or go down. And predictions are not a skill. If we are correct in our prediction, we are lucky.

Okay, let's say we are correct I mean lucky in timing a market decline. Hooray!! We feel amazing because we didn't lose as much money as some folks. Also because negative returns feel much much worse than positive returns feel good. And on top of that, we get to tell EVERYONE about how smart we are, or how smart our broker is. Our egos are stroked!

But we have a conundrum.

When do we get back into the market once we've gotten out? And, how do we know the market is poised to go back up when we do get back in?

The market could go up another 20%, or it could go down 20%. None of us really know. Actually, some of you may be thinking now is a good time to take money out of the market. Or maybe some of you already have. After all, the markets are all at ALL TIME HIGHS.

Question: when was the last time the market went down 100%?

Answer: NEVER.

And when was the last time the market went up 100%? Let's look...

If we use the S&P 500 Index as our "market", it's gone up 100% over the past 5 years and 8 months. Pretty crazy, huh?

Since March 2009, the S&P 500 Index is up over 230%.

And going back before the 2008/2009 Market Crash, the S&P 500 is still up nearly 70% over the last 10 years.

So here we are. We wisely passed on the wave that would've sent us tumbling. Now we're waiting for the next wave. Will it be a wave that could send us tumbling again? Or a wave that could be AWESOME to ride?


If you're going to be in the market, if you're going to be an investor, you have to ride all the waves. EVERY. SINGLE. WAVE. Sure, you might catch a rogue wave that sends your portfolio tumbling. Actually, you will. That's what the markets do. Just like the waves.

Remember, there's always another wave coming. And over time, you'll catch more waves that make you feel like you're flying and fewer waves that send you tumbling. So keep on riding those waves. Be like Sutton.