At this point in time people are receiving their quarterly statements and for the vast majority of Americans and the vast majority of our clients, they are seeing negative numbers. Negative numbers that you might not have seen for a while.
I want to be able to provide some perspective.
Number 1. The perspective that I would like to share is that for over 85% of my adult lifetime I have worked in the financial services industry. I have seen these ups and downs. They come. They go. They go. They come. This doesn’t make it any easier when people open up statements, and they see the negative returns; the negative returns year-to-date. In fact, I am reading these numbers from a recent issue of the Wall Street Journal. This is what people have experienced over this last year through the second quarter; it's a good thing we don’t sell bitcoin, that’s down 59.6% year-to-date, the NASDAQ composite index is down 29.5%, technology stocks down 27.2%, the Russel 2000 Index was down 23.9%, emerging market bonds down 21.8%, the S&P 500 down 20.6%, financial stocks down 19.5%, copper down 16.6%, the Dow Jones Industrial Average was down 15.3%, silver was down by 13.1%, and healthcare stocks were down 9.1%.
All the while, we saw that the prices of other things (hence inflation) was going up; coffee was up 3.3%, orange juice up 22.8%, corn 25.4%, soybeans 26.1%, energy stocks up 29.2%, crude oil 40.6%, natural gas prices up 45.4%, and gasoline (we have all felt this at the pump) up 63.8%. So, what does a person do at this point when you get the envelope in the mail, it has your quarterly statement, do you open it up? Do you look at it? Or do you just put it away for the time being? You will have to make that decision for yourself.
Number 2. Look at the amount of time that you might have. If you are preparing for retirement, let’s say it’s out 10, 20 years, this will probably just look like a blip in the road years from now. If you are in retirement, and you need assets to live on now, take them out of the assets that are your “safest” assets. The ones that have probably been affected the least. Provide things (the other funds) with the opportunity of being able to come back with time.
Number 3. It’s important that you look at the whole landscape. Your quarterly statement is based on a single date, at 3 o’clock in the afternoon CDT when the market closed. The first point was January 1st of this year and then where we ended at the end of the second quarter. That’s two numbers. Obviously, it shows what happened along the way, but we’re basically looking at point to point.
Number 4. What are your goals? Have your goals changed? Do you have the time left to be able to make those goals occur? For those clients of ours that use retail mutual funds, we try to construct portfolios in such a way to give you the most opportunity with risk that is appropriate for your age and your situation. For those of our clients that have a Registered Investment Advisor account, we are able to make little tweaks along the way to better position you for opportunities and potentially take care of those downturns as well. We have more of a “hands-on” that we can do day-to-day.
Whatever your situation, if you feel somewhat panicked, please give us a call. Know that we are looking at your accounts on a regular basis and if you need someone to hold your hand, that is what we have been doing for decades to help you see yourself through. Help us see you through these difficult times and these difficult quarterly statements. So, if you need some encouragement or you would just like to be updated about your account, perhaps it’s time to schedule your Financialoscopy.
