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What We Didn’t End Up Doing

What We Didn't End Up Doing

The markets basically sold off 11% from their high. Technically that’s a correction, but the term is not important…what happened is.

A Private Wealth Plan is designed to keep clients focused on what their money is for.  The generic term for that is a “goal”, or more accurately, several goals.  The Plan should be a guide to follow when corrections happen.  It should allow clients to say, “Thankfully, I have cash to use during this downturn so I don’t have to worry and sell.”

It’s supposed to keep people from making irrational decisions.

That’s all great, but what about managing the money? What happens when clients stick to the plan, but the advisors managing their money don’t? After all, we are only human and subject to the same behavioral biases.

At Monument, we run our equity portfolios based on models. Each model uses data that is trend-based instead of using one point of data. It keeps us from making decisions based on one employment report, one inflation report or one interest rate increase…and frankly any other financial, political or other type of news that ends up on the Constantly Negative Business Channel (CNBC) or the Constant Negative News (CNN) channel.

Here is a run-down of the activity that took place in our equity models over the recent correction and bounce-back:

  • Core Model – no sales
  • Dividend Model – no sales
  • Growth Model – no sales
  • Strategic Income – no sales

The reason? The correction was a reaction to single data points and talking heads extrapolating future scenarios. Meanwhile the models, which utilize trend data, kept emotion out of the picture. No guessing, coin flipping or claiming to be smart enough to know what is going to happen next. The models tell us what to sell and what to buy. The rules guide the decisions.

What has happened so far? The markets have recovered.

Winners? Those who have a long-term plan and didn’t panic. Losers? Those who sold or spent money hedging.

Models will never be able to identify the very top of the market or highest price to sell any holding, nor will they know the bottom or the lowest price to buy any holding. But they are better than relying on gut instinct by a long shot. When the Dow was at 20,000 there were a lot of people who thought the market was “just too high” based on gut and emotion and were scared to either put money to work or even stay invested.

The models painted a different story.

The Dow closed at 25,219 on Friday.

Investors should have two containers – Container One should be cash that can supplement your lifestyle if the market goes through a correction. You use this cash in times when the market is down…it will keep you from selling low. Container Two should hold a portfolio designed to grow over a longer time horizon…and should not be constructed to react to corrections.

Investors should know exactly how much risk they are comfortable with and willing to take. Lots of people think they have a high tolerance for risk when the market is going up, but become intolerant of that risk when the market goes down.

If you are an investor who feels like the recent downturn has you questioning your willingness to take risk, let us know. We have fun online risk tests that we’re happy to send you as a first step. You can email our Team at info@monumentwm.com and we’ll set one up for you.

Keep looking forward,



Important Disclosure Information

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. A copy of Monument Wealth Management’s current written disclosure statement discussing our advisory services and fees is available for review upon request.


David B. photo

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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