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July 2017 Opening Thoughts

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What happens in our office when the DOW drops 300 points?? The honest (and surprising) truth is – we typically get one phone call or one email about the DOW dropping. This one client expresses concern about the economy and the impact on their investment portfolio. “Will I still be okay?” They need a little reassurance. And this is perfectly fine. I’m more concerned about all the others and what they are thinking but not expressing at the time. The honest (and surprising) truth is – we typically get one phone call or one email about the DOW dropping. This one client expresses concern about the economy and the impact on their investment portfolio. “Will I still be okay?” They need a little reassurance. And this is perfectly fine. I’m more concerned about all the others and what they are thinking but not expressing at the time.

Here is my written response to the last such email I received (about a news headline and the DOW dropping):

This kind of thing is pretty common place in the news and how it spills over into the stock markets. The attached “Reasons Not to Invest” illustration shows what happened after other unbelievable events in the past. Whether it was the Kennedy assassination, Nixon resignation, Y2K, war, or some other crisis, the stock market always seems to adjust and move upward. It will again.

(Keep in mind that the DOW was up over 15% since Trump’s election; giving back a few percent doesn’t end this bull market. Also, at the moment, the markets are up in after-hours trading.) There is no crystal ball that could say what the stock market would do if Trump was elected president, and we don’t know what effect his daily decisions will have on the market either. And will those effects be up or down, and will they last one hour, one day, or one year?

My investment strategy doesn’t change based upon headline news. I monitor the longer-term trends of the market and increase or decrease exposure to the market based upon changes in those trends. We want to be fully invested while the longer-term trend is up, but reduce risk/exposure when that trend turns down (the LT trend doesn’t turn based upon any one day or week). So, I will stay the course for the time being, but if the trend changes, I’ll be ready to minimize the downside risk.

I very much appreciate this client writing in. They told me later that they just needed a pep talk. I like that.

Those clients that get really concerned about the stock market volatility, but don’t say a word, are more concerning to me. They take all this news in and let it simmer. They feel frustrated, worried, and overwhelmed by this complex world and its potential impact on their financial well-being. They start second guessing their financial plan and their investment strategy. With the news flashing them in the face and the short-term stock market volatility, they forget about the long-term nature of this. They may even make rash decisions that they’ll later regret.

So, please don’t let your concerns simmer. Come into our office for a face-to-face talk. After our meeting, you may decide to stay the course or make some adjustment to your approach to investing. We offer many ways of investing and we’re happy to work with you—please, just tell us how you’re feeling about your investments and their ability to meet your financial objectives.

I’m grateful for each client contact. This is very much a relationship business, and I enjoy helping people make wise financial decisions, manage investment portfolios, and become more happy and secure. I have kept every card I’ve received over the years from clients expressing their thanks and have pinned them up on a large bulletin board in my office. (The cards, not the clients.) We have clients that go back a couple decades, and these clients really understand and appreciate the value of our firm’s services. They have been through up markets and down markets with us, and they trust what we’re doing. This bulletin board is more of an award to our firm than any other certificate, recognition, or plaque received.

Thank you for contacting us whenever and however you do! We may only see you at tax time and prepare your income tax returns. Or, we may see you periodically throughout the year for an investment review meeting. We may see you about your annuities, long term care insurance, your life insurance or many other financial planning engagements. Either way, we delight in serving you! So, again, thank you for reaching out to us. Keep calling, we’re here for you.

What happens in our office when the DOW jumps 300 points?? Nothing, absolutely nothing! Well, as it relates to client calls. No, clients don’t call when their investments go up. Sniff, sniff . . . this is me crying. Ha, ha. Actually, on big up days in the market, I’m doing the happy dance!! I like it when my portfolio goes up – and yours too!

Keep up the contact, when the market is up or down, and we’ll keep moving you closer and closer to being (more) happy and secure.

Warm Regards,
Monty