I hope you and your family are safe, healthy, and preparing for what looks like some major disruption in all of our lives for the foreseeable future due to the coronavirus pandemic.
I’d like to share a message about the market's volatility and how it may be affecting your investments. We have been planning for this and we always plan for it.
We are fiduciaries, and it's just part of our fiduciary process. If you are concerned about market losses, when we meet with you and we set up your plan, we may have put you with money managers who will go to cash in a crisis. We work with several of them. Clark Capital, Howard Capital Management Savos, and they've been doing a good job during this downturn. They are all down slightly and nobody likes to lose money, but generally they are down nothing compared to what the market is doing. And yet they are still in somewhat invested and some bonds ,some cash, but the idea is to stay invested This is a temporary thing — a virus — it could be months, it could be a year, it could cause some real damage.
We're not going to tell you just to ride it out, ride it to the bottom, this is where we are different.
We also will work with things that are guaranteed. We have CDs that are issued by major banks that are still tied to the market, you can maybe make a little bit more if the market is up. There are some that have floors or buffers where they will eat the first percent of a loss. That's also true with insurance companies that will guarantee through an annuity perhaps every dollar you put in will be guaranteed either for income or to even give you growth for retirement. Some of these are not necessarily for retirement income, but will just be for a period of time—it's fixed—you may get an interest rate, there's no risk of loss at all, or it could be that it's also for a short period of time, I mean still a few years, but then there will be buffers they will eat the first 10% or even 25% of a loss, they will cap it on the upside. But then I'm thinking in this downturn, you're probably not giving up very much on the outs on the upside. It's the the buffers on the downside that you want.
We have used these products for our clients and generally they have really paid off, they've been worth putting into the portfolio. And that's one way that we are different.
We're amazed our phones have not been ringing off the hook.
Because I think we've done a good job from the beginning. It's an important point is to not try to fix a problem when you're in the middle of it. But to be prepared beforehand, it's like having insurance before you need it. So when something does go wrong, you're covered. And that's how we've tried to plan for all of our clients.
I remember that from 2008 I was doing this back then. The market meltdown when the S&P 500 was down more than 50% at one time and a lot of financial advisors were saying, don't worry about it. It's long term money, ride it out, it will come back. This is how small investors always underperform and lose, they sell when the markets down, they realize a loss. They don't get back in when the market goes up.
Well, we have a better strategy for most people. We will try to work within your risk tolerance and make sure that it doesn't go all the way down to the bottom to begin with. And that if it does, the market goes down, you've got breaks and stops as we go through. But yet you're still invested. And when the market comes back up, you're still positioned.
So there are ways to manage this risk. And this is one of the things we've done very well for our clients. So you can get some growth with some risk control with some of these things that we've put in place.
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Investments in securities do not oﬀer a ﬁx rate of return. Principal, yield and/or share price will ﬂuctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. No system or ﬁnancial planning strategy can guarantee future results.
Securities and advisory services offered through Registered Representatives of Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency), member FINRA/SIPC, a broker/dealer and a registered investment adviser. Cetera is under separate ownership from any other entity. Treece Financial group is not affiliated with Cetera Advisors LLC.