Critical Market Update!

What a trying week. Funny how when things are going well we all feel like even ‘slightly bad’ will never happen again, at least not to me.

And that’s all we had this week. A minor pullback in an ongoing bull market. Nothing to get too alarmed about, as long as you have done the proper planning and are managing your money, “Tactically”.

For the most part, following a very calm Q3, the stock market has had a few terrible days which can cause inexperienced investors to panic.

Of course, 800 point down days make us all take notice, but that is the correction of today’s Information Age.  Instead of taking 6-9 months to drop, sell-off’s are quick and violent. I have been around for a long time and let me tell you, I will take these massive daily swings rather than the grueling months long corrections we used to get. No matter how nerve racking they can get!

This was also expected. As I said in my article last week, the warning signs were there and to be prepared. Almost every index, as well as most international markets have been dropping for week, except for the S&P 500. Something had to give, and it did.

The bottom line is that this looks, feels and smells like just a simple normal correction. They happen, routinely, so “fagetaboutit”. It will be over shortly and it will be a distant memory. Just like the 14% we had from February to June. See, you forgot that one already!

As for our clients, your portfolio is just fine. We’re only down a few percent, even if it feels like a lot.  Rest comfortably knowing that we are on top of it.

We manage accounts using all 6 non-correlating asset classes, stocks, bonds, real estate, commodities, international and cash. Plus, our trade team at Formula Folios is watching the market and your portfolio, every minute of the day, ready to take action if necessary. That’s why I am such an advocate of “tactical” money management.

Also, let’s not forget that you have our Weathguard Asset protection system which is built into your account and helps act like a circuit breaker on your portfolio from the highest point your portfolio has ever been at.

Although, I do feel bad for investors who use a passive approach with a more buy-and-hold (buy-and-hope) because they could get hurt the most.

And of course there are the investors that think the investing game is easy and focus on the high flying growth stocks. The two darlings of Wall Street, Netflix and Amazon, are down a devastating 24% and 17% respectively from their highs just days ago. The best message I’ve heard for “be the expert or hire one!

During corrections, there is one thing you definitely don’t do – sell into the panic. You ride them out because no one knows when they will hit and when they will be over. For most who do sell, they almost always buy get back in higher than where they got out.

Selling is only warranted if there is a major shift in the world and something is inherently wrong that will cause a prolonged sell-off, and I don’t see that happening.

What’s causing this sell-off?

  1. Rates have been rising which always spooks investors. As long as they are rising moderately and not spiking, which they have been, it’s not a bad thing.
  2. It’s Pre-Earnings Napperiod. We are in the immediate time right before earnings are released that always get scary.

During this nap period, there is a legal blackout time right before a corporation announces earnings that prevents companies from talking about anything, so the only thing investors have to focus on are the headlines…and the headlines are always awful.

This is where I think we are today. There has been some trepidation on whether earnings will disappoint because a few companies have issued some warnings.

This is pretty common as companies that will come in light, typically warn while those who meet or beat expectations simply announce on their earnings release date.

My feeling is that once earnings start to be released in the next few weeks, they will be better than expected and the market will rally, making this just another correction to “fagetabout”.

However, that said, if earnings come in drastically worse than expected, that might signal that major trend shift which I discuss above. If that happens, or anything that looks like it might change and make the investing climate more dangerous or negative, we will be ready to act!

For retirement investors, it’s a slightly different story. You can’t afford or survive another big downturn, so prepare accordingly: Put your retirement master plan, tactical investment and tax strategy and asset protection system firmly in place….and stick to it. It’s what we help our clients do everyday.

If we can help, just give me a call.

Cheers -Keith Springer

916-925-8900

P.S. “Invest for need, not for greed!™”

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