By Steve Martin, Managing Partner
Before you delete this, read the first three paragraphs. This is not another corporate, boiler-plate email telling you we are washing our hands, and taking precautions. We are doing everything recommended to stay safe, but that’s not the point of this message.
As I write this, the Coronavirus continues to expand its reach, causing havoc around the world. Every television channel is covering it. Our favorite sporting events and theater performances have been cancelled, and even our places of worship, the places many of us go to for strength in times of trial, are not holding services.
At SRQ Wealth, we feel we have been “called” for this situation. It’s not just our experience; it’s having team, SRQ Wealth + Carson Group. Karin, Nancy and I have worked together for 15 years. Taylor has been part of the team for 5 years. We have advised clients through three bear markets, a couple dozen corrections and countless “bad news” headlines. In my 23 years in this industry, I have seen most clients make the right decisions in tough times, but I have also seen a few make the wrong decisions, usually against our recommendations. In times like these…
“Clients don’t need more information, they need advice.”
…you need someone who’s been through these crises before; someone who can speak the unvarnished truth to you, and someone who knows you and truly cares about your particular situation.
We review every client, every week as a team in an intra-office meeting. We take your financial health very seriously. To that end, we are not only reviewing investment portfolios, markets, and talking to research professionals, we are re-reviewing the short term planning needs for our clients.
We don’t react out fear, we respond out of faith. We often say that to be a successful investor, it takes three things: Faith, Patience and Discipline. This bear market, as did all of the others, will test you in all three areas:
Faith is not a religious faith, but a faith that our country/economy is resilient, is willing to fight for what’s right, and one that will continue to triumph in the face of challenges. That’s who we are; that’s the beauty of living in the greatest country in the world…with top-notch healthcare systems in place to fight this virus.
Patience is tough enough to practice in good times. We have become used to 1 day delivery and drive-thru coffee. Now we have to be even more patient and wait for our investments to do what they have always done over long periods of time. We know volatility happens, but clients sometimes forget the emotions that can come with it. It’s our job to keep you focused on your financial plan, not on the news media.
Discipline means sticking to that financial plan; even adding to it, sometimes when it hurts most. No one likes to see their investments go down, including us, but staying the course, with occasional course corrections, is imperative your long-term success. SRQ Wealth has already made changes to some clients’ portfolios, and we will likely do a few more before this is all over.
Did you know? Since this last bull market started 2009, there have been over 2,500 trading days. If you missed being invested for the 20 best trading days, your return would have been cut in half. (source: JP Morgan, Q1 Guide to Markets). Do you know when those “best days” happened? Usually they happened right after the worst days…the day most “investors” wanted to get out.
Here’s our advice:
- Review your short term spending needs (the next 1-2 years). We are doing the same for you. If we feel your cash flow is at risk or not sufficient, we’ll be discussing this with you.
- Review your needs for Years 3-10. Any assets needed for this period can be invested, but should likely be invested modestly.
- Any assets not needed until later years should probably be invested for growth. Markets are rarely down over 10 year periods of time, especially at the levels we are seeing today. If you have too much money in the first two “buckets,” now could be a great time to move more into your growth bucket.
- It’s also a great time to consider “harvesting” some tax losses.
While others are reacting to their fears and making poor investment decisions, because they have no plan, remember that if you work with SRQ Wealth, you have a plan. You don’t need to react – we aren’t. We are responding – out of confidence that we are called to do this. Called to be your advisor when you need us most.
Don’t react, respond.
A diversified portfolio does not assure a profit or protect against loss in a declining market.