September of this year will mark the 30th year that I’ve been in the financial services business. Over these years, I’ve been blessed to gain the trust and friendship of many clients. Some of my first clients in Pennsylvania and Virginia in 1987 are still with us today. For several of them, I’m now working with parents to save for the fourth generation’s college. Trust me, if you think inflation is bad, you ought to see what it has done to the cost of an education!
As I sit at my desk, the Wall Street Journal and Starbucks in hand, the pundits are predicting Armageddon and the demise of the financial markets. Looking back, we’ve weathered these “apocalypses” time and time again. In 1987, my first full year as an independent, we witnessed “Black Monday” when markets around the world crashed and the Dow Jones Industrials dropped 508 points to 1,738. The fact is, if you had listened to the commentators every time they predicted the demise of the US markets, you’d have missed some of the best bull markets in history. The Vanguard article, “Corrections and bear markets: what does Vanguard think?”, does a good job of looking back at bear markets and explaining that they are inevitable.
When the market goes down, irrational decisions stem from thoughts that the market will continue to go down, until you are left with nothing. If you are invested in a globally diversified portfolio, the majority of publicly traded companies from around the world would have to go out of business for your portfolio to go to zero. That is simply not going to happen. A well-diversified portfolio prepares you to weather bear markets and reap the rewards of bull markets. The 2008 financial crisis reminds us of the risks associated with owning even the most stable and well-known companies: Circuit City, Lehman Brothers, etc. Owning individual stocks comes with incredible downside risk as they can become worthless.
While we welcome your calls, typically our phones don’t ring during these trying times as many of you have stood beside us before while we’ve pressed on together. Our clients know that our advice is to persevere, stay diversified, and understand that for every investor that sells a stock out of fear, there is one on the other side of the trade owning that position to better prepare for a pending rally.
As a former mentor once told me, “These are the days we earn our money as anyone can be a financial advisor in the good times. It’s your job to talk clients off the ledge and make them understand that they are investing for a lifetime, not just a year or two.” That was sage advice then, and it holds true 30 years later. The global capital markets are efficient; trust them. As always, I welcome your comments, concerns and calls. If we may be of service in any way, please do not hesitate to call!
Tom Wiseman, President