Scary Market Headlines: Fact Or Fiction?

If you read this newsletter with any regularity, you know that I attempt to make the complexities of investments and retirement planning…less complex. I do this because a fairly high percentage of the population hates financial talk. It’s simply not something that interests everyone. Given that, I’ll apologize in advance (sort of), because we need to address some of the current economic headlines that are fairly technical and unsettling.  If you’re one of those people who appreciate my attempts to add lightheartedness to financial talk, don’t tune me out…I’ll get back to that momentarily.

Here are this week’s biggest headlines:

• China is engaging in a currency war, purposely reducing the value of its currency to make its exports cheaper to the rest of the world.
• The financial quants (market chart analysts) have declared a “death cross” for the stock market, allegedly ushering in a longer-term market decline (a bear market).
• The Federal Reserve is attempting to raise US interest rates to a more ‘normal’ level, with little success.
• Oil prices have dropped to their lowest level since 2009, signaling trouble for a broader spectrum of US economic variables.

Yikes!

So, is this it? Is this the inevitable stock market plunge that we’ve been discussing for several years? Very likely. Possibly not.

Simply put, these headlines are indicative of real challenges faced by the general economy and markets, of both the stock and bond variety. As you likely noticed, most stocks are down in value this week, this month, this year. There’s not much to celebrate when you remove your hands from your eyes and review your account statements.

This is one of those moments when your convictions will be challenged and your strategy will be stress-tested. Believe it or not, however, this is precisely when investors make money. Wait, what?

Consider this: if there was no risk of loss present in your investment portfolio, then why would somebody pay you for the use of your money in the first place? Why would somebody reward you if markets always went up in value? There simply wouldn’t be any reason to reward those who stayed the course and stuck it out, if periodic losses were eliminated. Anybody can look like a genius when times are good!

If you’re invested in the stock and bond markets, then you should be prepared for fairly long periods of disappointment. Why do we do this to ourselves? Because without warning, investors will begin regaining confidence and markets will rise quietly, gradually, without fanfare. And if you’re not participating, you don’t get to win. It’s a game that is won by practicing behaviors that are opposite the masses. Think about that for a moment.

Financial headlines can be very helpful to an astute investor: when the headlines are scary, that’s what makes investing valuable. Conversely, when the headlines are touting easy money, guard your purses and wallets!

Want an example? How many commercials have you heard recently, begging you to bring in your gold for quick, easy cash? Me neither. Why is that? Gold’s price fell from $1,900 an ounce to just over $1,100 an ounce, four years later. That’s a drop of around 40%. So where did all of the gold opportunists go? (Note: I’m not against gold ownership if your reasons for owning it are very clear.)

Your strategy, as a retiree, should be to lock in your retirement income, free of market risk. With the money left over, invest in a highly diversified portfolio that allows you to win when markets rise, and win when markets fall. Yes, it’s two different flavors of winning, but winning all the same.

On a separate, but related topic, my least favorite part of parenting is disciplining my children. My least favorite part of having been a child was being disciplined. But you know what? I wouldn’t trade those lessons of discipline for anything; it made me a better person. Investing requires discipline, and it stinks. It’s no fun, it’s awful.

If we can set a solid strategy, focus on the long term, and remain disciplined, we get to win. The alternative is to chase headlines, second-guess your game plan, and look back at missed opportunities and ask yourself: “What if I had been more courageous?”

As always, reach out to me if we can help you in any way. Let’s not go solo during tough times, lean on us.[vc_row no_margin=”true” padding_top=”0px” padding_bottom=”0px” border=”none”][vc_column width=”1/1″]All the best,

Adam Cufr, RICP®

PS. The MarketWatch headline the day after I wrote this was: “These Two Indicators Are Telling You To Buy Stocks.” Sheesh, it’s maddening.

As you may be aware, we teach classes at BGSU at Levis Commons called Retirement Elevated.

These classes are designed to offer the current or aspiring retiree a serious education in retirement planning. This is a wonderful opportunity for you or your friends to access a lot of great material in a focused classroom educational setting.

During the two-evening class, we will go in-depth in the following planning topics:

• Retirement Income
• Investments
• Taxes
• Healthcare
• Estate Planning

Retirement Elevated classes are designed for people between the ages of 50 and 75 who seek to strengthen their understanding of retirement planning and all of its nuances.

CLASS DATES AND TIMES ARE AS FOLLOWS:

Tuesdays, September 22nd and 29th
6:00 to 9:00 p.m.
-or-
Thursdays, September 24th and October 1st
6:00 to 9:00 p.m.

If you or a friend would like to register, contact our office at (419) 931-0704

Class Fee: FREE!

Materials Fee: $49 (additional workbook $19)

If you’d like to see the complete course flyer, contact us and we’ll get you a copy.