A Drunken, Erratic Mess

In season four of Mad Men, Don Draper goes on a bender and forces Peggy, his protege, to pull an all-nighter on her birthday. Throughout the episode, he berates her and acts like a drunken, erratic mess. Finally, she confronts him about his behavior, and, annoyed by her audacity, he angrily responds, "That's what the money is for!"

So far this year, the stock market has acted a lot like Don Draper and we, as investors, are Peggy--confused and helpless. We see self-inflicted volatility and uncertainty coursing through the stock market and wonder if staying the course is really worthwhile. But, when you work for Don Draper or invest long-term in the stock market, you sign up for both the money and the chaos.

For better or for worse, that's just the way it works. In fact, the direct relationship between risk (i.e. volatility) and return is a feature of the stock market, not a bug. If the stock market delivered consistent returns year-after-year, everyone would remain invested all the time and no one would make any money. Returns would dwindle, and the stock market would resemble the Treasury market.

Instead, we get the opportunity to endure erratic months like April, where the S&P 500 average daily spread between the highs and lows was 3.13%, which was enough volatility to make many investors sell. But if you missed just one day, April 9, which was the best day of the month, your portfolio was down 7% instead of roughly flat on the month. It's been chaos, but that's what the long-term returns are for.

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Josh Norris is an Investment Advisory Representative of LeFleur Financial. Josh can be reached at josh@lefleurfinancial.com.

Josh Norris, CPA, CFP, CFA is the managing member of LeFleur Financial, a wealth management and tax advisory firm.