For those of you who read this text on my “home page” and look forward to the monthly new verbiage, you may have noticed I rarely talk about the markets or investments as I usually lean towards a more holistic and emotional approach towards planning. 

However, I’d be remiss this month to ignore the current volatility that is taking place among all equity markets, and with good cause.  

Many people are aware that diversification and proper asset allocation greatly helps to manage overall risk.  That, combined with the discipline to not try to time the markets should in many cases help you reach reasonable goals. 

That being said, my opinion of where the broad markets may be headed in the next couple of years, is based on my experience and feelings from my 29 years in this industry. Witnessing what is currently taking place in the current economic and political environment leads me to believe that any professional with true caring of their clients would proclaim that they need to manage risk as much as the investments.  

When I first came into this business one of my first clients was investing longer than I was alive.  I embraced this experience and valued his wisdom, our friendship and our conversations. Regarding the press, and opinions from the media, he once said “every time they tell you this time it’s different, it turns out to be the same”. 

In most regards, that phrase is powerfully correct, in my opinion.  

If we look at the performance of the broad markets over the last 100 years, from the roaring 20’s, with the crash of 1929, a World War, the Cold War, many other global conflicts, massive technological breakthroughs, multiple global energy crises, and several market corrections (we can add unlimited worthy instances) the charts show that the broad equity markets come back from “dips” and make new highs.  I once heard this question at a seminar, “how often does the S&P 500 index make new lows and how often does it make new highs?”

No one in the audience answered because it was a trick question.  If we examine a chart of the S&P 500 index, it substantiates that answer – over time. 

The chart (looking backwards of course) never makes new lows.  And always makes new highs.  And as we look back that question is no longer a trick question – however, if you carve out particular segments of time in the charts, the markets can make new loves respective of that time frame. Most people’s investment time horizons are not 100 years.   

As I mentioned earlier with my client’s proclamation of “every time they say it’s different, it’s the same”, what if one day it is different?  Would your portfolio be able to withstand the “different”?  More importantly, if it was “the same” do you have the time to wait for the markets to “come back” for your assets to provide you with what you were expecting from them?

Peter Janowsky