Avoiding a Crash

Did everyone get home safely?

Photo: John Mosesso, NBII. Source: Wikimedia

The Sunday after Thanksgiving weekend is one of the busiest travel days of the year. It’s estimated that over 4 million people flew home on Sunday, with almost 50 million taking to the roads. I drove into Boston’s Logan Airport early Sunday morning, and the traffic at 5:30 am was something to see – cars honking and cutting each other off, security officers yelling and waving frantically, folks scrambling to get themselves and their bags extracted from their vehicles. The pouring rain didn’t help.

The travelers in our family all got home safely, thank goodness, but between the ice and the traffic and the tight schedules, it was an adventure. The storm meant most wildlife near our home was bedded down, another travel hazard in northern New England can be animal collisions. Running into a deer, moose, or even a wild turkey will play havoc with your car and your schedule. And it doesn’t do the animal much good, either.

I’ve only had one near-miss with a moose. I was travelling southbound on Interstate 89 in Vermont. About 100 yards in front of me a good sized cow emerged from the overgrowth in the highway median, right into my lane. Fortunately for both of us, she decided the browse was better in the brush than on the pavement, and she turned back almost right away. But my pulse was racing after that close encounter.

There are millions of collisions with deer every year across the US, and a few thousand with moose. Because moose are so much bigger, hitting one is a much more serious event. The most important factor in both avoiding an animal and reducing damage to your car is your speed. That’s why that moose wandering onto I-89 was so scary. I was travelling right around the speed limit. (Truth be told, a Vermont State Trooper had just passed me.)

Source: Maindot.gov

Vehicle-animal encounters can be similar to the way investors interact with the market. Markets are going to fluctuate and change as news develops or as companies innovate or struggle with changing economic and financial conditions. If interest rates rise, bond prices will fall. Markets vary and fluctuate. It’s what they do. And the more variable the present value of future cash flows, the more volatile the price of any asset will be.

Investors shouldn’t be surprised, then, when the value of our investment portfolios goes up and down, in the same way that we shouldn’t be surprised to see a moose near the median strip of a highway in northern Vermont. The key to staying safe around animals is staying alert and expecting the unexpected. The key to managing money in volatile markets is matching our need for cash with how much cash the portfolio generates. That way we never have to sell something just after the market goes down.

Living around animals means planning for unanticipated movements and behaviors. Living with markets mean expecting the unexpected, as well. Because the only thing certain about markets – and moose – is that they defy prediction.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2018-11-26T07:54:53+00:00November 26th, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

Leave A Comment