Reasons for Individual Investors to Be Grateful in 2020

In his TED Talk, David Steindl-Rast makes the case for happiness being directly tied to gratitude. The monk and interfaith scholar says that people who are more grateful tend to also be happier. I’m referring to it not only because it is a great talk (to be fair, I’m a fan of TED Talks in general), but because today is Thanksgiving. (Happy Thanksgiving!) Today is supposed to be a day for being thankful. With this in mind, I’m going to list things we individual investors should be grateful for but may overlook. It’s intended to be an evolving list, with changes potentially made to it on future Thanksgivings.

Positive News About Coronavirus Vaccines—Late-stage trials for the Pfizer/BioNTech and the Moderna vaccines suggest both are safe and highly effective. U.S. Food and Drug Administration (FDA) approval is still needed and we’ll need to see how they work once given to larger numbers of people, but the initial news is very positive. A vaccine will both save lives and help the economy grow. In the meantime, continue to wear a mask.

Having a Portfolio—If you’re worried about the economic impact of the coronavirus, the election, valuations, low/negative yields, economic growth, a return of downside volatility or anything else potentially affecting the value of your portfolio in an adverse manner, be grateful. I realize this seems counterintuitive but consider the bigger picture: You have wealth to worry about. No matter how large or small your portfolio is, it’s money you do not have to spend today. Not everyone has this luxury.

Never Having to Report Performance—An advantage that we individual investors have over professional money managers is never having to report our performance. I cannot stress enough how big of an advantage this is. It gives us the ability to stick to strategies proven to work over the long term—even when they are out of favor on a short-term basis—without ever having to worry about keeping clients happy.

Being Able to Invest in All Exchange-Listed Stocks—In addition to not having to report performance, we individual investors are not restricted in what we can invest in. This gives us the ability to invest in stocks whose market capitalizations are too small for institutional investors to even consider because of their investment objectives and/or the sheer amount of money they have to invest. The flexibility also allows us to take full advantage of the size, value and momentum premiums (and other return anomalies) identified by academic research. Our ability to invest in smaller companies is a big advantage.

Decreasing Costs—The price war among brokerage firms has eliminated commissions for buying stocks and exchange-traded funds (ETFs). Many mutual funds can be bought and sold on a transaction-free basis. (Check with your broker for terms and the list of eligible funds.) Mutual fund fees are being pressured by the popularity of ETFs and the still-increasing popularity of index funds. All of this means more money in your portfolio.

Compounding—There is no greater friend to investors than compounding. As many of you know, compounding takes a dollar’s worth of assets today and turns it into far more than a dollar’s worth of assets tomorrow. This is why the elimination of commissions and the pressure on fund fees are beneficial: Every dollar you save is a dollar you get to keep investing. Compounding grows your portfolio and then takes the increased value and grows it even more.

The Stock Market’s Rebound—The S&P 500 index is on pace to finish this year well into positive territory. The Russell 2000 index is as well. These gains are being realized despite the “Coronavirus Crash,” which occurred earlier this year. The rebound shows the importance of not panicking when stock market conditions become turbulent.

Being a Proactive Manager of Your Wealth—If you’re reading this, then you are a person who has chosen to be in control of your finances. Regardless of whether you do everything yourself, work with an adviser, use index funds or actively pick stocks, you have made the decision both to be engaged and to continue learning. Be proud of yourself for doing so and be grateful that you have the ability to do so.