It is hard to stay calm, rational and to make studied decisions when our attention span is fleeting. According to a study done in the early 2000s our average attention span was 12 seconds back then, but now with the dopamine stimulant (i.e. cell phones) we carry in our hands we have been conditioned down to an average of 8 seconds of attention span - even a goldfish is more focused at 9 seconds!

What does this matter as we manage our wealth?

Many investors today are worried about an imminent correction and worry even while times are good that something bad will happen. In 2017 investors had the same concerns and the financial media were more than happy to take advantage of shorter attention spans with headlines like the ones below, which unnerved some investors enough to needlessly abandon their financial plans.

• A record number of investors think this market is overvalued (cnbc.com, Mar 21, 2017)
• Investment pros seeing market as overvalued hits record high  (cnbc.com, Aug 15, 2017)
• Top Economist: Get Ready for a Stock Market Drop (fortune.com, Aug 10, 2017)
• Opinion: Let this be your final warning on U.S. stocks’ overvaluation (marketwatch.com, Aug 4, 2017)

Coincidentally, we started the US Dividend Income Strategy in February 2017, as always not knowing what the short-term held for investors, just that we should invest with discipline. Since then the strategy has compounded capital at 14.80%*, or almost a doubling of capital in US dollars. Not what the experts would have predicted.

What does the future hold?

Again, we have no short-term predictions, but currently the stocks we own trade at 11.8** times next years earnings, which is less than the historical measure of 16.8*** times. Meanwhile, the US stock market is trading at 17.4** times next year's earnings. So not only is the strategy not exposed to the latest hot growth stocks, it should mitigate losses during the next correction as the stocks we hold are cheaper. As we see from the headlines listed above no one knows the timing of the next said correction, but we do know it will come at some point because they are regular expected events.

Stay calm and stop listening to financial media and the so-called "experts" whose forecasts amount to nothing more than guesses and only have the effect of disturbing your peace of mind and ability to focus. When the next correction comes, and it will, stay the course and continue to follow your financial plan, or better yet, if you are able to do so, add funds to your portfolio and invest accordingly!

 

Randy, Ian, and the team at R&R Investment Partners

*Source: AMA Program. Annualized rate of return. As of July 31, 2021

**Source: CPMS. Price to Earnings ratio on next year median EPS estimate. US  market is the S&P 500. As of September 7, 2021

***Source: CPMS. Historic Median Price / Earnings (last 10 yrs, Extreme Values Removed). As of September 7, 2021