The Real Health of Your Wealth

A friend recently told me about an exercise stress test that he had. EKG monitor leads were attached, and then he was asked to run on a treadmill. As he stepped on to the treadmill, he asked the doctor whether they were measuring how fast he could go or if they were measuring how long he could run. "Neither," said the doctor. "We're measuring how long it takes your heart rate to recover after you stop."

Considered this way, health is a measurement of how resilient a person is to cardiovascular stress, and how quickly the body can return to normal. The difference between a healthy person and an unhealthy one isn't the experiencing of stress, but the physical response or symptoms to it: whether the exertion gives way to a normal resting heart rate with the passage of a few minutes or whether it spirals into cardiac arrest.

In fact, the very healthiest individuals have a counterintuitive physical and psychological need for the stress induced by exercise. This enjoyment derived from stress might seem bizarre, until you consider that a healthy body doesn't merely return to its baseline conditions after exercise, but emerges stronger than it was before. This is the feeling that elite athletes crave.

A healthy person is not one that never gets sick, but is a person that recovers relatively quickly from a wide range of illnesses and injuries.

Similarly, the health of a company is probably best measured by how quickly it can return to normal – measured by cash flow instead of heart rate – following a sudden shock or downturn. In aggregate, the health of the stock market can be measured by the recovery rate of its component companies. The marker of a healthy company or market is not occasional and temporary declines in their prices, but that they have the resources to maintain operations and the ability to recover and resume growth as the uncertainty abates.

In fact, the very healthiest companies and markets thrive in conditions that their less healthy counterparts would consider adverse. The elite athletes of the business world don't just capture market share from their competitors; they emerge from each trial more efficient and more profitable than they were before. Indeed, this is the opportunity that elite investors crave.

The health of a financial plan is best measured not by the absence of stressful circumstances, but by how resilient the plan is to unfortunate surprises. When costs of living increase, or when market returns decrease, or when there is loss of income or unexpected expenses, it is as natural for our heart rates to quicken as it does when we run on a treadmill. The question is: when the going gets tough, does the lifestyle have to adjust, and if so, how much? The answer to this question is the measure of the health of financial planning.

This is far from a theoretical question, or an academic one about data. I would invite you to consider the response and resilience of your portfolio and financial plan in the context of the COVID-19 lockdown crash last year, or all of the other financial stress tests that we have endured together.

The very healthiest financial plans do not emerge from tumultuous times weaker at all, but stronger because they become even more refined and focused on what matters most. Great planning is resilient against impacts from external events, yet flexible and responsive to changing needs. The perennial stress testing of our planning leads us to reflect on and pursue what is truly valuable and meaningful. We are honored to be the stewards of your financial health, and we are looking forward to your next check-ups!

In Health,

Frank Hujsa, CFP®, CLU®

Partner, Acadium Financial Partners
27499 Riverview Center Blvd, 108
Bonita Springs, FL 34134

Any opinions are those of Frank Hujsa are not necessarily those of Raymond James. Securities offered through Raymond James Financial Services, Inc. member FINRA/SIPC. Acadium Financial Partners is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. Individual investor's results will vary. Past performance does not guarantee future results.