The Return of Brood XIII: What Cicadas Can Teach Us About Financial Planning

By: Joseph Goldy, CFP®

After spending 17 years lying dormant underground, a new generation of Brood XIII cicadas will soon emerge across large swaths of the eastern United States. This phenomenon is one of the most remarkable examples of cyclical events in the natural world.

It's fascinating to think that the last time Brood XIII was about to turn in for its 17-year slumber, Steve Jobs introduced the iPhone to the world for the first time. A year later, a mysterious person named Satoshi Nakamoto wrote a paper describing something he called Bitcoin, which began trading for less than a penny.

Even more astonishing is that this year will be the first time in over 220 years that both Brood XIII and Brood XIX are emerging simultaneously. This means that the last time both cicada broods walked the earth together, George Washington was president, and the New York Stock Exchange had just come into being less than ten years earlier under the famous Buttonwood tree at 68 Wall Street, New York City.

But for investors and financial planners, the return of the 17-year cicadas also serves as an apt metaphor for the cyclical nature of markets and the importance of taking a long-term, disciplined approach to building wealth.

Successfully investing requires patience and perseverance over extremely long time horizons. Instead of chasing short-term trends or constantly trading in and out of positions, savvy investors follow proven strategies that align with their broader financial goals and life cycles.

This means having the discipline to make consistent contributions to investment accounts during the "dormant" phases when markets are down or stagnating, just as the cicadas lie in wait underground. Investors must also be prepared to fully take advantage of periods of opportunity that arise - such as the rapid market rebound we witnessed in the wake of the COVID-19 pandemic.

Of course, unlike the cicadas, we humans can plan and exert some control over the outcomes we experience in our financial lives. A skilled wealth advisor can help craft a personalized investment plan designed to grow and compound wealth over decades through a carefully constructed mix of assets like stocks, bonds, private market investments, and cash.

This diversified approach with periodic rebalancing helps ensure you remain invested through all phases of the market cycle - not just the boom periods - allowing your money to keep working for you optimally. Behavioral coaching from an advisor can also prevent emotional decision-making that derails long-term plans.

Perhaps most importantly, a comprehensive financial plan considers the unique "seasons" and "life cycles" each investor will experience based on their situations and goals. A young professional in the accumulation phase may focus on aggressive growth, while a retiree will likely take a more conservative approach to generating income.

Even within these broader phases, there are additional cycles and periods to navigate - from raising children to funding education to paying off debts and managing taxes. A skilled financial planner helps ensure your strategies and asset allocations are appropriately synced with your needs during each distinct stage of life.

The return of Brood XIII this year provides a vivid demonstration of nature's precise cycles in action. But it's also a reminder that the most successful human investors are keenly attuned to the cyclical patterns and processes governing financial markets and wealth creation over time.

Over the last 17 years, those with the patience and discipline to stick to their long-term investment plans through the inevitable ups and downs were more likely to reach their goals despite often being given many reasons to sell. Here are just a handful of some financial and geopolitical events that happened while Brood XIII was asleep:

  • Lehman Brothers collapse (Global Financial Crisis)

  • Housing market implodes

  • S&P downgrades U.S. debt

  • Flash Crash (Dow decline of 1000 points within minutes)

  • Deepwater Horizon oil spill continued for 87 days

  • H1N1 pandemic

  • Boston Marathon bombing

  • Brexit

  • COVID 19 pandemic

  • U.S. inflation tops 9%

  • Russia attacks Ukraine

Yet, the S&P 500 index from January 1, 2007, through April 25, 2024, had a cumulative return of about 400%, or just under 10% annualized. This is why remaining invested through turbulent market events and having an ongoing relationship with a financial advisor is crucial. At HIGHLAND, we always try to remain unbiased to help you make informed decisions about when to take advantage of opportunities or protect yourself from making emotional decisions during market turbulence.

Abandoning a disciplined investment strategy due to short-term market volatility or fleeting economic conditions often prevents investors from capitalizing on growth opportunities that arise through cyclical patterns over more extended periods.

So the next time you hear the iconic buzzing of Brood XIII's cicadas, let it serve as a reminder of the virtues of patience, perseverance, and respecting the cyclical nature of markets. Investors who align their strategies and mindset with these principles increase their chances of success over the long run.

The foregoing content reflects the opinions of Highland Financial Advisors, LLC, and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. 

Past performance may not be indicative of future results. Indices, such as at S&P 500 Index, are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. 

Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful or that markets will act as they have in the past. 

Joseph Goldy, CFP®, is a wealth advisor and CERTIFIED FINANCIAL PLANNER™ at Highland Financial Advisors, LLC, a fee-only fiduciary wealth advisory firm based in Wayne, New Jersey.   

Joe specializes in working with newly independent women because of divorce or losing a spouse. He understands firsthand the value of having a clear financial picture pre- and post-divorce and a plan to restate goals as a single person. When he is not helping clients, Joe enjoys spending time with his two sons outdoors and volunteering to help raise money for Type 1 diabetes organizations.