Preparing for your Golden Bell

The 3-time major champion Brooks Koepka approached the 12th hole (nicknamed “The Golden Bell”) at Augusta National within 2 strokes of the lead during the 2019 Masters.  He quickly grabbed a 9 iron, aimed right at the flag like he always did, and proceeded to hit his ball into Rae’s Creek carding a double bogey.  Brooks said he did not react to his ball going into the water because he didn’t want Tiger Woods to know that the wind affected his ball.  He missed the point of who he was playing against. 

Koepka was playing against the 15-time major champion and Tiger was mentally prepared.  Tiger always knew that he was not going to take on the flag at 12.  The shot was a safe cut shot off left side of the bunker.  Miss it straight… you are fine.  Miss it left…you are safe.  Miss it right… you are on the flag.  Most importantly Rae’s Creek is de-risked and double bogey is most likely taken out of the picture by aiming to the left of the bunker.  Tiger carded a par at 12 and went on to win the 2019 Masters by one stroke over Koepka cementing his 15th major championship.

Countless ‘experts’ said Tiger would never win a major again.  His stock looked bad.  His back was a barrier.  Negative ‘noise’ from the public persisted for years.  But he did win a major again. 

Some may say that the markets will never recover, but history and smart money tells us differently.  Per MFS’s By the Numbers on March 16, 2020, “In all 11 bear markets that suffered at least a 20% decline in the S&P 500 Index in the last 75 years (1945-2020) before last week’s 12th bear market, the stock market eventually recovered 100% of the loss sustained, i.e., going above the previous bull market high.  The average time the stock market took to recover back to a new high closing price from the low point in the downturn was 24 months (source: BTN Research).

We can learn from the sports analogy above.  What can you do now to prepare for your 12th Hole at Augusta National from a ‘financial planning’ perspective?

  • Note the recently announced extension date for your 2020 federal individual taxes: July 15th.  State tax return due dates may be different than federal.  Note that the extended date for Mississippi is May 15th.  Use your appropriate tax deadline to add IRA contributions for the 2019 tax year, or to open a new IRA. 
  • If the recent market volatility does not scare you, consider adding to your investments in order to capitalize on good stock valuations.  Or, you could consider reallocating some fixed income investments into some undervalued equities.  Make sure your dividends are reinvesting in equities.  Remember that the uber successful investor Warren Buffet once invested in distressed banks in 2008 when the negative experts said not to.  He made a lot of money off those investments.  Uncertain times create real opportunities due to discounted valuations.
  • If the recent market volatility does scare you, consider paying dividends into cash and prepare to reduce your asset allocation from equities to a more appropriate risk level once the market recovers some lost value. 
  • Review your named beneficiaries on investment accounts, retirement accounts, and insurance policies.  In addition, make sure your insurance policies are sufficient for your current needs. This planning sounds simple but it is important.

The great Jack Nicklaus once called “The Golden Bell” the toughest tournament hole in golf.  In these uncertain times, it is easy to lock-up and avoid preparing for your “Golden Bell” until you are up on the tee box.  We are here to help you prepare your financial future now to be better positioned when the winds and tide turn again.  They will.  Be prepared like Tiger Woods was at the 2019 Masters.