“Off The Wall” Blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
I saw a headline the other day on Bloomberg TV. It said, “Growing list of investor concerns.”
Seriously? Of course there is a growing list of concerns! The market just sold off.
People get concerned when they lose money. That’s natural and understandable.
Needs create concern. When you need the money and it loses value, you become concerned.
However, now is not the time for investors to be identifying needs and expressing concerns. The time to do that is in the bull market when things are good. It’s hard to do in the throes of euphoric market excitement. Remember those days? Watching balances increase just about every day from November 2017 to January 2018 and from April to October of this year?
In a recent casual get together with some financial industry colleagues, we all got to talking about how we saw investors reacting to the selloff. We agreed that many investors saw their balances hit all-time highs at the end of January this year only to see them erode back down to pre-November 2017 levels by early February. We also agreed that most were fine, but some were nervous, angry, disappointed or feeling like there was something that should have been done – especially when nothing (purposely) was done.
Fast forward to the beginning of October when all the losses were made up and the markets were hitting new all-time highs. Many of those who expressed concern in February were silent.
…Until last week.
We have written before about running a “fire drill,” and I’m not sure I’ve ever written a blog where I don’t mention the importance of having a plan and forecasting cash needs out no less than 12 months.
Selloffs like this statistically happen twice a year. The market does a good job of reminding us…about twice a year.
This bottoming could be a process. On the other hand, the 4th quarter is usually pretty good historically. I think it’s more constructive to focus on the steepening of the yield curve, great GDP, 7 million job openings and 20% profit growth. We remain at MONCON 5, the lowest level of recession concern.
Stay calm during periods like this. Avoid emotional investment decisions. Remember that volatility can go both directions…it’s just another period of time in the market! If you got bent out of shape over the past few weeks, you need to consider adjusting your asset allocation when the market finally recovers.
One thing investors have a hard time learning is that doing nothing is, more often than not, a value-add. People want to be “right” (and as an extension want us to be “right”) at times like this. That often equates to wanting to take action (or wanting us to take some sort of action). Action is often damaging to returns.
Investing isn’t so much about being right as it is about being SUCCESSFUL.
Keep looking forward,
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Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.
All indexes referenced are unmanaged and cannot be invested into directly. The economic forecasts set forth may not develop as predicted. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument Wealth Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Monument Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
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David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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