Relentless: Investments, Inflation, and Your Financial Future

by Beck Bode Beck Bode | August 9, 2022

When I think of the word “relentless,” I think of John McClane, the character that Bruce Willis plays in the Die Hard movies. The first movie in the series is about a group of terrorists who take over a skyscraper in Los Angeles. McClane is an off-duty police officer who happens to be visiting his estranged wife there and gets caught up in the hostage crisis. All the Die Hard movies follow a similar theme, with McClane overcoming a challenging circumstance every single time. 

What stands out for me about his character is that he accepts and acknowledges the reality before him. Despite the circumstances, he is willing to stop at nothing in the pursuit of what is right and good. He’s persistent. He’s relentless

In the movies, the terrorist organizations are the biggest threats to John McClane and what matters to him most. But what is the threat to investors? Contrary to mainstream belief that the threat to your long-term financial future is a war, a recession, or whatever other calamity is the topic of the day - the real threat to your long-term financial health is the relentless nature of inflation as it pushes forward silently and persistently our purchasing power. 

 

Investing To Protect Against the ‘Carbon Monoxide’ of Investing: Inflation

Inflation, for the most part, floats under the radar. It's silent and creeps on you, kind of like the carbon monoxide of the investment world. You can't see it or smell it, but it is tremendously dangerous. Even though everyone is hollering about inflation today, the warning signs were there months ago. 

 

Human Behavior: The OTHER Threat in Investing

The second threat to investor success, the other ‘hostage-taker,’ is human emotionality. Human behavior is the biggest threat to our long-term financial wellbeing, possibly even more so than inflation. No investor has ever lost money long-term in the markets. No investor, that is, who has been able to stay in it. 

The markets have averaged about a 10% rate of return annually over long periods of time. If inflation is relentless, then equally relentless is the markets’ unstoppable movement forward. The threat that derails everything we want from the market is our emotions. 

When our emotions hijack our best intentions, they can drive us to “avoid volatility” by suggesting to us that we get out of the market. However, this decision only hurts us in the long run.

 

An Investment Advisor As Relentless as the Market

A relentless force like the market demands a relentless commitment to riding its waves. As financial advisors, I believe we have a mandate to educate our clients and protect them from the threats they face. 

When we became advisors, we knowingly or unknowingly agreed to be the John McClanes in our clients’ lives. If we want to be the heroes of our story, we cannot ever allow our own feelings or insecurities to get in the way of what’s good and right for our clients. 

An example of that insecurity would be not making a recommendation for the fear of a client disagreeing or not investing money in equities, because we know at some point the equity markets will move with extreme volatility. We can’t hold back because we're worried about clients being upset with us. 

As financial advisors, we have to be relentless in our willingness to protect our clients from taking what may be perceived as the "safer route."

 

The Truth About Investing to Protect Against Inflation

At one point in Die Hard, there is an exchange of gunfire at the airport, resulting in a ton of broken glass. The only way McClane can get to the point where he can save somebody is to walk barefoot through the shards of glass. Does he do it? (Spoiler alert: you bet he does.) 

There’s an acknowledgment of how bad the situation is, and it doesn’t matter. He says to himself, I’m going to do this. I’m willing to be uncomfortable. Is he a reluctant hero? He is. He has his doubts and insecurities, but he doesn’t let them get in the way of his mission.

 

Staying on the Path

Just like McClane, we have to acknowledge that we don't have control over the markets or external circumstances. McClane had no idea he was walking into a hostage crisis. He had no idea he was going to be in a standoff at an airport. But he did what he could with what he knew and was guided by his own vision of what was right. 

We, too, can take a page from McClane’s book and do what’s good and what’s right, by reminding ourselves that inflation and the markets wait for no one. As advisors, our job is to actively prevent our clients from harming their own futures, by gently and firmly bringing them back to the path they have chosen. Our job is to help our clients remain invested in ways that outpace the eroding effects of inflation now and in the future.

For more insights, get your free copy of Dancing with the Analysts today.

Ben Beck is Managing Partner & Chief Investment Officer at Beck Bode, a deliberately different wealth management firm with a unique view on investing, business and life.

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