Broker Check

What’s Your View of the Elephant?

February 09, 2024

Almost twenty years ago now, I started my career as a financial advisor. Markets had been stretched to their limits and the feds began a slow reduction in rates to combat the concern of deflation and market declines. Broad Indexes performed negatively for almost a full decade from 2000 to 2010.

If you weren’t retired, or you weren’t an advisor keeping notes- this period of time probably wasn’t noteworthy for you or your family. In fact, if you’re a baby boomer and you were adding to stocks in your 401k it served you well- in retrospect you were buying “low.”

However, if you were retired and you planned to simply distribute gains at 5% or so from your stock index funds starting around 2000, then you, on the other hand, were almost completely screwed. As you took money out of your investments so did the stock market and if you didn’t have a strategy or responsive advisor you simply had to go back to work.

The reality for retirees in the second half of my career has been far different. Interest rates on bonds and CDs approach zero and stocks have gone up. However, my experience of serving retirees the first decade was profound and real.

Obviously, neither of these perspectives are complete truths. Interest rates won’t always be low and stocks won’t always go up.  Like the old story of zoo patrons describing their view of an elephant and describing it to a blind person; not every angle provides the same perspective. If you’re behind it you see the rear and if you’re in front if it you see the big ears, trunk, and tusk. Neither is completely true nor false.

So the punch line is this, if you expect to need your money to last for more than a decade you need more than one portfolio. We suggest having three “purposefully designed buckets”. One for the upcoming years which we call the (spend) portfolio, the next is for market downturns (risk management), and the last is for the long-term (growth potential). Three distinct portfolios for three distinct needs and market circumstances.

At Jennings & Associates we believe three buckets are better than one no matter what your perspective of the elephant.

Keith Jennings


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.