Client Portals

Investment Anniversaries: What We Can Learn from Historic Days3 min read

Sep 18, 2019 - John Osbon ( 4 mins to read)

Not all investment days are created equal. There’s something about the start of Fall today that brings anniversaries to mind. Many people believe August, September and October are cursed times to invest, that stock plunges are inevitable and imminent. A closer look shows that important anniversaries are spread randomly throughout the year; surges and crashes know no calendar. Let’s take a closer look at key investment anniversaries and what we can learn from them.

Stock market anniversaries

We naturally remember negative stock market anniversaries like the crash of 1987 (10/19/87), the Lehman collapse (9/15/08), or 2018’s year-end plunge (12/21/18), to name a few. What these anniversaries have in common, like the Long Term Capital bailout (9/23/98) and the 2011 rout (9/22/11), is that they have some credible event that starts them…and then they are over. The worst-case scenario does not materialize. They are frightening, but not fatal. Severe, but also self-correcting. In these examples investors would have been happy to invest more money and would have reaped large rewards fairly quickly.

Tax days

There are a quartet of tax quarter-anniversaries every year. Tax days in the US, such as January, April, June and September 15th, are a reminder that individuals pay lots of taxes. These quarter-anniversaries are important reminders to maximize after-tax returns since that is the only measure that matters. Investors often overlook the effect of taxes on their returns. Tax days are the best reminders to minimize investment taxes.

Tectonic anniversaries

Some anniversaries are so important that the day and year take on historical significance. The three I have in mind are our departure from the gold standard (8/15/71), the debut of the first listed index fund (1/22/93) and the SALT tax reform (12/22/17). The last one, which limits state and local tax deductibility, is still reverberating through the United States, changing real estate values, home locations and voting habits. All three of these tectonic anniversaries are reflected in Osbon Capital portfolios. We invest in gold, we use many listed index funds, and we have regular discussions on debt structure and personal real estate relative to SALT.

Your own investing anniversaries

These anniversaries tend to be more personal, more specific to the family or to the individual. They might mark your first investment, the first year when your gain qualified as long term, or your first personal, retirement, trust and charitable accounts. They could also include the sale of a business, or creation of accounts for spouses, children and grandchildren. These anniversaries are reminders to keep investing appropriate to your stage in life and according to your goals. After 20 years of doing these things automatically and by themselves, most families eventually engage an investment professional for help. The complexity gets too big and the investment amounts do, too.

Celebrate the ones that matter

A single investment day can make a huge difference in your financial life. If you were fortunate enough to invest on 10/20/87, 3/9/09 or 2/19/16, more power to you. Those bad-but-good days are counter-examples for those who see investment gloom and doom in every headline, every month and year. While down days can be intimidating, even with frequent setbacks and periodic crashes diversified investments have seen relentless growth for many decades. That single investment day that makes a huge difference for you is a great anniversary to celebrate.

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