
Keep Your Eye on the Horizon
A couple of years ago we purchased a sailboat, starting our sailing adventure. I was new to sailing and fell in love with the idea of setting sail along Lake Michigan’s beautiful shoreline. What better way to spend a warm summer afternoon? That is – until the boat leaned way over which caused me to retreat into the cabin in a panic. Sheer terror – NOT very relaxing! I enrolled in a keel-boat certification class to teach me the skills I needed and learn that I’m not really about to die. It was incredibly challenging for me to overcome my fear when the boat was heeling in a brisk wind. The class helped, and I am proud to say I passed! While I can now successfully dock a boat, I continue to struggle with steering during higher winds. The boat has a tiller, which you move in the opposite direction of where you want the boat to go. It is relatively intuitive in calm conditions. But it’s panic all over again when the forces of wind and waves push the boat around, often taking us off course.
The recent market volatility can make investors feel the same way.
S&P 500 Index year-to-date

Source: Charles Schwab & Co., Inc.
The current market conditions have made many investors feel like they are in gale-force winds with 20-foot waves and no sightline to the horizon. It is easy to allow your emotions to steer you off course more than the rough conditions warrant. A well thought out financial plan gives investors a sight line to the horizon. The plan can be easy to embrace during calm markets and feels intuitive, just like steering in calm waters. Long term investors will face many volatile markets. That is predictable, the timing of them – not so much. A solid plan anticipates that you will face volatile markets and charts a course that will get you through rough markets. By anticipating that there will be volatile markets, investors can focus on the plan, as the path they were steering toward gets obscured by the waves of uncertainty.
The same lessons I learned during sailing apply to investing. Now when I am caught in high waves with wind trying to blow me off course, I strive to fight my emotions of fear and look to my compass to guide my steering. A well thought out financial plan is the compass for investors. You may not always be able to steer a straight course, but as you get knocked off course, re-orient toward the direction of your course. It is unrealistic to expect that you will always be on course. The important thing is that you maintain your focus on the desired course and change in order to move closer to your desired direction.
The markets will move up and down, but your course is set by your plan and helps you stay disciplined through market dips and swings. Keep your eyes focused on where you are going and adjust the tiller as your compass guides you. Talk with your financial advisor about a plan that will chart a course for your goals and help you to weather the rough seas that inevitably come up from time to time.
Felicia Davis O'Malley, MBA is a Managing Director at Eastgate Capital Advisors LLC, an Illinois registered investment advisor. Contact Felicia for more information at fomalley@eastgateca.com, 312-690-4902 or www.eastgateca.com.