Roller-coaster of a Market

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January 29, 2016
Roller-coaster of a Market
January 29, 2016, By: David Maurice

It’s been extremely difficult to decide when to stop reading and when to start writing for this week’s blog. If I could just spend one day only dedicated to this it would be fine. But I start writing and by the time I take a break and return, everything has changed so much on the market scene that I have to stop writing, start reading again and . . . well you get the point.

So, I’m stepping back while the market is up – I think it’s up – it was way up last time I looked, but if I look again it could be down again. . . .

Never mind. We remain confident that the market is overreacting to items that are individually and collectively being blown out of proportion: supposed China slow-down, depressed commodity prices, other commodity dependent emerging market struggles, Fed rate hikes, etc. We continue to expect this downturn to smooth out through 2016 toward decent returns for diversified portfolios.

Since we focus on the long term necessity for growth in our portfolios for the majority of our clients’ assets and balance that with the need for liquidity and stability, we remain committed to a strategic, global, asset allocation approach that has exposure to virtually all accessible asset classes all over the world in both equities and fixed income securities.

Of course, this requires exposure to shorter term market declines of 10% to 20% and sometimes more. Our experience and history strongly suggests that markets will recover and will reward investors who remain disciplined in their diversified strategy through these anticipated and normal declines in spite of the discomfort.

In the meantime liquidity in the form of money markets, short term bonds and other fixed income securities must also remain a strong focus, especially for those taking regular distributions, and to help us all sleep at night. Every portfolio has been built for this with the best intent to weather such storms for 1, 2 or even 3 years without giving up exposure to equities for the largest part of most accounts.

We vividly recall how grinding the bear market of 2000-2003 was and the devastatingly abrupt decline of 2008-2009. And we know how long term investors with properly diversified portfolios survived these grueling times. We don’t think that’s where things are headed at this point for the many reasons we’ve been pointing to since last fall and over the last few weeks.

So we say to the money media out there, as quoted by my dear wife and partner in the local papers August 2011, “Calm down and get a grip.” And to our clients and friends we say, “Hang in there; you’re doing just great!”

Have a great weekend! And keep your eyes on the skies not the headlines or the talking heads.