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Your Portfolio in Times of Uncertainty


"What the imagination can’t conjure, reality delivers with a shrug.”

Trumbo (movie voice-over) 

No matter how much we've blathered on about preparing for perilous times like these, planning for it versus actually enduring it is about the same as watching a tornado on YouTube versus being swept into one in real-time.

And yet, we stand by our advice. As a steadfast fiduciary advisor, we will continue to help implement the kinds of investment opportunities that make sense for your portfolio. These may include: 

  • Rebalancing your portfolio when warranted, to stay on course with long-term goals.  

  • Tax-loss harvesting where practical, to offset the costs of recently incurred and/or future taxable gains. (Yes, we still fully expect to see future long-term market growth!)  

  • Roth IRA conversions when they may benefit your retirement or estate planning.   

  • Seizing other opportunities when your plans call for it. For example, if you’ve been holding a concentrated stock position to avoid incurring taxable gains, now may be the perfect time to reduce your risks and strengthen your portfolio by selling all or part of that position.  

If, on the other hand, you’ve begun to seriously question your course, think of current conditions as a stress test. Is your tolerance for risk what you thought?  

Ask yourself objectively: Can I tough out the fears I’m feeling right now? If so, we encourage you to stick with your existing investment allocations despite the angst. Remember, the diversified portfolio of equity, fixed income, and cash was built with the long-term in mind (not just during bull markets but also through bear markets (and sometimes they are extreme). Plan to expect more volatility (both ups and downs) to occur.  Should you want to discuss your portfolio further, we are here for you and welcome the opportunity.

Another question sometimes asked during market extremes goes something like this: I’m okay with my portfolio mix, but why not get out of the markets temporarily until the worst is over?  

Whether we leave your portfolio as is, increase equity exposure, or decide to permanently reduce some of its market exposure, we will never recommend trying to accurately time when to get out of, and safely jump back into, volatile markets. While nobody knows exactly when a recovery will occur, history has informed us of what typically happens when it does.  

A recent Wall Street Journal piece explains, using the bull market that began back in 2009 as an illustration: “A surprising share of a new bull market’s returns pile up in its very early stages when people are most fearful. Take the one that ended last month. Putting $100,000 into an S&P 500 index fund on the day the bull began on March 9, 2009, and selling at last month’s peak would have seen that turn into $630,000, including dividends. Waiting just three months to make sure it wasn’t yet another head fake would have earned you only $450,000.”  

In other words, while most are still assuming there’s no hope in sight, the markets can quietly and often dramatically make their big come-back, at least for those who have kept a portion of their wealth invested in them.  

Just when we think it seems so obvious what the market will do, it tends to do just the opposite.  As always, without the ability to see what is only apparent in hindsight, we encourage you to focus instead on that which you can control: the safety of your family and the quality of time you spend together, the care of your property, and, perhaps, the completion of some unfinished projects. 

We are always available to talk should you have any questions. 

On a positive news note, Jodi and I and the family have recently been looking for and seeking out any good news we can find out there.  Maybe you have been doing the same.  Check out John Krasinski’s “Some Good News.”  He highlights good news from around the world, and the first video includes an interview with Steve Carell.  We recently came across this and thought it was worth sharing.  

I hope you are all doing well and staying healthy!