Investing Basics

Why In The World Would You Get A Portfolio Review with The DOW at 25,146.39?

Complacency is our greatest enemy.

-Ace Greenberg, Former Chairman and CEO of Bear Stearns, R. I. P.

I’m not certain of much. How could I be with all the “Fake News” chants and actual fake news being proliferated by Turkish teens in fake news “factories,” and the like?

What I am certain of, however, is that many of you are getting complacent.

Since March of 2009 the stock market has been going mostly up, sans a brief flirtation with recession in Late 2015 – early 2016. Things are good, you’re finally seeing positive returns, and therefore, you’ve got bigger things to worry about.

Listen. I get it. Life is hard. We all have too much (to do) on our plate. It’s hard just to get by, and even harder to “get ahead” or simply live a slightly better life. The sacrifices you make in order to have a successful marriage, great kids, and a career can feel overwhelming. And that’s only if one of life’s big ones doesn’t set you back even further.

I totally get that it’s very difficult to put investing at the top, or near the top, of the priority list with everything else going on. It’s even harder when we’re two months off the all-time high in stock market history.

But don’t lose sight of the realities of our economy; when interest rates rise too far too fast, recessions typically begin. This means it’s likely we are nearer the end of the business cycle than the beginning. There are economic signs already in place that show growth could slow in the second half of 2018. That’s one month away.

In true Squire style, let’s breakdown what’s happening and give you the information you need to make the best decisions:

Is Drag Dragging Down Your Portfolio?

Did you know last year, in a great year for the market, the S&P 500 had over 100 companies in it that were down from -1% to -71%. In a great year!

I call that drag. In 2008, a very bad year, 97% of all the companies in the S&P 500 were down. So, every year, good or bad there’s this drag that could potentially be eliminated with a different investment strategy.

What if that drag was 5 to 15 % per year? How much would that add up to over 20-30 years?

How Drag Can Be Affecting Your Portfolio

Let’s take a closer look. Here’s an example of the worst 30 years in stock market history (Blue Line). They happen to be the 30 years that ended at the beginning and bottom of the great depression, 1932.

Complacency in Investing

Figure A. Does it Pay to do things Differently? Source: Bloomberg and Squire Asset Management

The purple line shows what 4% more in investment return per year would do for your results in the worst 30-year period. The blue line shows the dollar value of holding an investment in the Dow Jones Industrial Average over the worst 30-year period in history.

You can see there’s a very large potential difference in dollar value even when we’re only talking about 1, 2, and 4% more growth per year. If you could save that 4% by eliminating or reducing some drag, your retirement savings could be closer to $2,000,000 rather than $600,000. So, this stuff matters.

Are You Prepared?

We do know the next stock market crash is around the corner. That corner could be from 1 to 365 days or more away. You see articles predicting one almost daily in the news. We just can’t predict when. But it’s coming, and we know people aren’t prepared.

How Do We Know Investors Aren’t Prepared?

We know because the portfolios we see are filled with overreactions to the last crash. Advisors and investors think diversification solves the problem of crashing assets. It does not. It cannot. More investments won’t stop investments from going down, more will go down with all the rest of the stuff. Only less of something going down can prevent loss in that something going down.

NOW is the time to get your portfolio reviewed. You’re running out of time. And you’ve been warned. Not only now by me but by the market. The last drop was your warning. Get prepared. We can help.

What is a Portfolio Review?

Just as the name implies, our advisors will review your investments. We take a close look at:

  • The number of stocks you hold or don’t hold
  • Which stocks, bonds, and funds you own and why
  • Their performance - is it above, average or below average? Is it still worth owning.
  • The number of Mutual Funds and ETFs
  • The duplicative or unnecessary investments, which is often very high.
  • The potential annual drag on your progress, can it be partially eliminated?

You’ve heard of taking the blinders off. Sometimes we’re so close to a situation or problem or we’ve been doing it the same way for so long, we can’t see the issues that have developed over time that others can see quite plainly. With a fresh set of eyes and our strategy of attempting loss reduction in crashes, called Truncate the Tail®, we evaluate the performance and potential performance of your portfolio. Then, we walk through the data with you, showing you the potential gaps and blind spots and helping ensure that you’re making the best possible decisions based on the best possible information.

In Essence, We Help You Take The Blinders Off

Could this lead to 1, 2, or 4% more return per year? Obviously, that can’t be promised. But what if it does? It can’t hurt to have us look. If you get a free portfolio review, from us, there are no strings attached. We’ll show you the duplication, overlap, over-diversification, in our Portfolio Report Card and you can choose where you go from there.

Do you want to lose 57 to 71% of your assets again in 2 to 4 years? The last time it came back but in 1932 it took 25 years. Can you live that long? Japan has never come back from their peak in 1988. You want to bet the ranch on that now?

Move your money up the priority list. Call us. Email the statements to us. Get prepared. Now is the time. You will not be able to say you weren’t warned or “we were all in the same boat” or “there was nowhere to hide.” I don’t know when it’s coming but I know that it is coming.

“Convincing people they’re wrong is difficult. Giving them the means to do what they’re already doing a little bit better is easier.”

-Stephen Denny

Talking Yourself out of This

Most of you will rationalize setting this aside as soon as you’re done reading this, so if you’re pretty sure you’ve already got it covered or your person does this already, consider this:

  • 4 of the last 4 portfolios we looked at were way over- diversified, meaning they have too many investments and significant drag on returns.
  • The last person made 41k in 2017 and didn’t even keep up with an average 60/40 stock/bond asset allocation return, in fact it was only 1/3rd of that.
  • The two before that had 56 and 80 mutual funds in them and close to 90,000 different investments.
  • The one before that had 20 mutual funds in a Roth Ira where you would want to grow it as fast as possible, because it’s TAX FREE, with a few select stocks.

These were good people, just like you, who thought they had it covered. Thank you, and have a great, busy, day!

Ready to get started with a portfolio review?

You won’t regret it! Start by submitting your statements here and we’ll contact you with the results. If nothing else, you will wind up with more accountability with your current advisor.

Start My Portfolio Review

Article tracking number - 1-734641

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Integrated Financial Group, a registered investment advisor. Integrated Financial Group and Squire Asset Management are separate entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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