Florida State And Your Investments

Bill Parrott |

The College Football Playoff Selection Committee handpicked their final four teams: Michigan, Washington, Texas, and Alabama – all worthy candidates. However, they left Florida State on the outside looking in despite winning the ACC conference and going undefeated. FSU is the first undefeated team from a Power Five conference to miss the playoffs -  a crushing blow to the school and its players.

I have always liked Florida State, especially under Coach Bobby Bowden, one of my all-time favorites. Coach Bowden's 1991 FSU team lost to archrival Miami when Florida State's kicker missed a field goal in Wide Right I. Wide Right II occurred a year later, losing to Miami again on another missed field goal. Florida State was in the hunt for the National Championship but came up short in both instances. It was gut-wrenching, but what happened this year was worse because the committee denied their chance to win another championship despite FSU's best efforts.  

Investors may, at times, feel like the Florida State Seminoles. Sometimes, things don't go as planned despite your best efforts.

Here are a few examples.

2022. The S&P 500 Index soared 90% from January 2019 to January 2022, averaging nearly 24% annually, and then it fell 18% in 2022. The market had performed well for three years, but the Federal Reserve started raising interest rates, and the index cratered. The market drop had nothing to do with your research or analysis; it was entirely out of your control. The market has rebounded this year, rising 18.92%.

COVID-19. No analyst, economist, or doctor predicted COVID-19 – not one. As a result, the S&P 500 fell 30% in thirty days in March 2020, and our economy experienced the shortest recession on record. Before the crash, the index was up about 5%. Investors were surprised as stocks experienced a downturn, yet those who stayed invested reaped the benefits with an impressive 18.4% return for the year.

Black Monday. The Dow Jones crashed 508 points, or 22%, on Monday, October 19, 1987. It was the worst correction since the Great Depression. The index was up 40% that year before it fell violently, wiping out the year's gains. Despite the crash, the index finished the year in positive territory, rising 2.26% in 1987.

Bad things happen to good people for no reason at all. Rebounding after a setback is crucial; redirect your focus to elements within your control, such as managing your savings and spending. The more you save and the less you spend, the better your financial future. You don't have any control over the stock market, interest rates, the economy, or the weather, so don't worry about those items.  

Florida State has an opportunity for redemption when they play Georgia in the Orange Bowl, a matchup of two teams victimized by the College Football Playoff Committee. I'm sure the Seminoles will approach their practice and game preparation as they always have with precision and control, not worrying about the past but concentrating on their future.

Focus on what you can control and ignore the rest.

Success comes from knowing that you did your best to become the best that you are capable of becoming. ~ John Wooden

December 6, 2023

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren't suitable for every investor. Prices and yields are for today only and are subject to change without notice. Past performance is not a guarantee of future performance.