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11/11/13 – Back from National and Thoughts About the Stock Market

Written by Brad McMillan, CFA®, CFP® | Nov 11, 2013 11:43:37 AM

Hanging out in planes and in airports yesterday, I was prepared to write something fairly caustic about US Airways. But I have to say, at the end of the day, they did a pretty good job.

It started with a 6:00 a.m. e-mail saying my flight that afternoon had been cancelled; due to mechanical failures, they had no plane. While I understand the problem of having no plane, the question becomes, Why is there no plane? According to Brian Harrison, Commonwealth’s insurance guru and my excellent travel companion yesterday, this is because US Air has one of the oldest fleets in the sky, making mechanical failures inevitable.

After rescheduling my flights via an indirect route through Washington, I thought I was all set—until the 1:25 p.m. flight to DC was delayed until 3:00, again due to mechanical problems. It might have been later, but US Air found a new plane for us (interestingly, at the same gate from which we were supposed to depart for Boston) and then found pilots as well.

It was a tense wait, as it seemed quite possible that we’d miss our connection by about 20 minutes and be stuck in DC for the night. When we landed, though, it turned out they had held the connection since there were about 10 of us on the plane who needed to get to Boston.

Our luggage didn’t make it, which is understandable, but on the whole, I was very impressed with how US Air handled the situation. The customer service people were all very considerate and genuinely helpful. Assuming I get my luggage back this morning, I have to call this a win for them—not what I was expecting to write. You should have planes that work, but if you don’t, you need a plan and a team that can minimize the damage. And they did.

As I write this, I’m thinking about some remarks I made at the National Conference, about how the stock market shows many signs of a bubble. While that doesn’t necessarily mean a correction over any time period, higher valuations—and higher debt levels—certainly raise the chances of a “mechanical breakdown,” just as the age of the US Air fleet does. That doesn’t mean any given plane or market is going to break down, just that you better have a plan in place to deal with it when and if it does. That plan can make the difference between a very unsatisfying result and one that ends up fairly good, despite the breakdown.

I’ve mentioned multiple times that failure to plan is planning to fail, and the need for planning rises with the risk level. For investors, I’d argue that, by many metrics, the need for planning is now at a high level.

This will be a short post, since I got in after midnight last night and plan to spend the rest of the day playing with my son—it looks like the weather is good for a hike this afternoon. But I’ll expand on the above points about the market (and make some considerably more cheerful ones about the economy as a whole) over the next week or so as I write up my talk from the conference.

Once again, thanks to everyone at Commonwealth—staff and advisors—for a really fun and informative conference. I come away every year marveling at just how much content, just how many exciting events, and just how many truly nice people can be crammed into a couple of days. One more for today’s list of gratitudes.