After a wild couple of years and an amazing 2nd, 3rd, and 4th quarter of 2009 – we’re finally in 2010. This alone seems like a milestone achievement of epic proportions considering where we were not more than a couple years ago.
2008 was nothing more than wealth destruction at it’s finest, in more ways than one. Real estate values plummeted, equity markets sank, jobless numbers rose, GDP shrank, the dollar became weak, and commodities were highly volatile to put it mildly! 2008 marks a year of despair and discontent.
2009 started off the same, people continued to make the wrong decisions at the wrong time. Average investor mentality prompted selling at what we look back now as the bottom. I know, there were investors who couldn’t remain grounded in their financial plans. Fear took over, greed was long gone, and a return of principal was all they wanted even if it meant abysmal interest rates and locking in paper losses. That proved to be an incredibly detrimental decision for the masses of individual investors throughout the world who made similar decisions.
What proved to work, which has proved to work time and time again for decades, is staying grounded in a solid plan. Those with near term cash needs separated in conservative money market and CD type of investments were able to weather the storm. In fact those same clients were able to re-balance their portfolios on the way down into first quarter 2009, and subsequently later at much higher levels later in 2009. For investors who stayed focused on their plans – the gains were tremendous as portions of equity positions were bought at depressed levels, and subsequently portions were sold later in 2009 at higher levels. All along, maintaining enough cash and CD investments to cover near term cash liquidity needs.
A bad year(s) coupled with bad decision making can lead to a lifetime of lost net wealth…
After nearly 15 years as a financial advisor (March 15 marks my 15th year since starting with then “Dean Witter Reynolds” and subsequently “Morgan Stanley” – as an advisor) 2009 will go down in the history of my career as one of the most successful advising experiences ever. In the grand scheme of things – I will always look back on the focus and fortitude it took my clients to endure the most difficult and challenging period for net wealth volatility since the decade of the great depression.
The trust clients placed in the process and long term focus I provided them is unequivocally my Firm’s most valuable asset.
That leads me to today, WELCOME TO 2010!!! Remember, we are investors, not speculators. We implement and manage focused and concise plans to achieve goals over long periods of time while reducing risk and volatility to a level each client is comfortable with. We CAN NOT predict the market movements, we DON’T try to manipulate investments to take advantage of “what we think will happen”. Truth is, no one knows.
Here’s the hook though, as Americans IT IS IN OUR BLOOD to think we know better, to think we can predict what investments or managers or assets will outperform. We ARE the greatest nation on the planet, if this drive to always outperform WASN’T in our persona – we wouldn’t be the greatest nation on the planet!
So, I propose to you NOT to try and guess where the markets are going. DON’T let fear and greed lead your investment decision making. ABSOLUTELY NEVER deviate from a solid long term plan UNLESS your financial situation changes. TURN OFF THE NEWS and the “talking heads”. For every analyst who says we’re going down, there’s another saying we’re going up. They don’t know anymore than you or I do.
What we DO KNOW HOWEVER, is that in the context of a well thought out longer term financial and investment plan (as you all know I share the mantra 5 years, 5 years, 5 years with many of my Fee-Only advisor counterparts), the strategies of minimizing costs, taxes, and turnover, consistently re-balancing at opportune times, monitoring your financial situation for adjustments to your longer term plan, updating your financial plan regularly, and staying focused on what works IS THE BEST WAY TO ACHIEVE FINANCIAL SUCCESS!
So prepare for a drop in your account values, prepare for another rocky year. I don’t know where we go from here, up, down, or sideways. I do know that we have a strategy in place based on you and your financial needs that is solid (if you question that statement to the slightest degree call me IMMEDIATELY so we can review your plan in person together AS SOON AS POSSIBLE!).
Now that you’ve had a chance to review your year end performance reports, please contact me at 702-987-1607 or greg@redrockwealth.com if there have been any changes to your financial situation I should be aware of OR if you have any questions we haven’t covered in your financial and investment management reviews.
Welcome to 2010!!! A year I hope to be filled with peace and financial prosperity!!!
