Planning in Uncertain Times: Strategic Investing and Emotional Discipline

In a recent appearance on the Aligned Money Show, the conversation focused on what matters most in today’s investment environment: preparation, strategy, and emotional discipline. From reflections on market cycles to the psychology of client behavior, the episode provided valuable insights for anyone seriously considering their financial future.

An Unusual Journey to Financial Planning

Before diving into finance, the conversation touched on some unexpected personal history, including a brief stint in the music industry and participation in national-level martial arts competitions. These anecdotes illustrate the depth of character and resilience that define the philosophy behind effective wealth management: adaptability, creativity, and a long-term view.

Markets Crave Clarity – Not Politics

Prior to the election, many investors were hesitant to make moves. Historical data show that the stock market tends to underperform during the months leading up to an election due to uncertainty, rather than concern about who wins. Once the outcome is clear, markets often rebound regardless of the political party in office. When clients expressed reluctance to invest before the election, a phased approach helped manage risk.

Entering the market gradually—rather than all at once—acknowledged the emotional and psychological weight behind financial decisions, without trying to predict outcomes that are inherently unknowable.

Combining Tactical and Strategic Investment Models

At Libertas Wealth Management, portfolios are often structured using a combination of strategic “buy and hold” models and tactical, trend-following strategies. This hybrid approach is grounded in years of experience navigating volatile markets, starting with the post-9/11 crash and evolving through the Great Recession and beyond.

Trend-following is not about prediction – it’s about responsiveness. Just like tornado sirens don’t always result in storms, market alerts don’t always lead to crashes. But ignoring them entirely could lead to significant portfolio drawdowns. Allocating a portion of assets to tactical models can reduce risk exposure while maintaining a long-term focus.

Smarter Diversification Through Relative Strength

Rather than investing in every asset class or market sector equally, Libertas focuses on “relative strength”- a data-driven process that identifies top-performing investments. The strategy is akin to placing bets only on playoff teams in a sports tournament, rather than the entire league.

This method doesn’t promise a 100% success rate, but historical win rates in the 70% range are a testament to its effectiveness. It also reflects a broader principle: not all diversification is intelligent diversification. Simply spreading money across every asset class may dilute performance and obscure risks.

Managing Behavior Is Harder Than Managing Money

While investment models can be rules-based and systematic, working with people is a more nuanced process. Financial decisions are deeply emotional, especially during downturns. Many investors abandon their plans not because the plan was flawed, but because the portfolio wasn’t aligned with their emotional tolerance for volatility.

This is why it’s essential to build portfolios not just for growth, but for durability as well. Just as no one wants to drive a race car across the country, most investors prefer a vehicle that’s reliable in all weather, capable of enduring storms without derailing the journey.

A Call to Action: Build a Plan, Don’t Wait

Perhaps the most compelling insight from the conversation was that the average American doesn’t build a financial plan until the age of 52. That’s a staggering statistic, especially considering how much earlier progress could be made with proper guidance.

The solution is simple, though not always easy. Start now. Find a fiduciary advisor with minimal conflicts of interest – resources like NAPFA.org offer a solid starting point – and begin building a plan that works for your life, goals, and risk tolerance.