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Substantial Doses of Coffee Needed

Substantial Doses of Coffee Needed

December 15, 2016

The hangover from the global political spectacle required substantial doses of industrial-strength coffee.  Investment managers and economists around the globe have to consider not only financial risk but now increased political risk, which is most likely being underestimated.  Don’t forget, their crystal balls have not been working so well.  Just one tweet away from fortunes or failures.  Coming off of the election event, after an initial shock, equity markets staged one of the most impressive rebounds in history. Clearly, this is not an example of rational investor behavior: from a steep downturn to that impressive rebound in just a few hours.  All of this is taking place as the Price/Earning (P/E) ratio continues to climb because the markets march higher but profits do not.  Recently interest rates have risen without growth, perhaps even without much inflation.  Such a scenario has historically not been good for equities, contrary to what is currently believed by the markets.

Let me just clarify for the record – There is no such thing as passive investing.

There are many index funds, industry sector funds, style funds, and country funds, which run counter to the very mechanism they were proposing to avoid, the perpetual challenge: how does one even begin to understand the risks entailed by the 1,594 different ETFs traded in the U.S.  As of year-end 2015 there were 360 broad-based, 266 sector funds, 592 international, 81 commodity, 21 hybrid, and 274 bond ETFs.  Not to mention all the quality individual stocks and bonds in the investment universe.  “Which do you buy, when do you sell, and why?”  

This is why dynamic goals-based planning along with active investment management helps to make sure you are not left behind on a prickly perch.

Goals-based planning works to simplify your financial path.  We are here to help.  

Our mission in the Wealth Management business is to provide you with the clarity, confidence, and commitment to achieve your financial goals. You will benefit from a new-found understanding of how much is possible.  

Email us for a complimentary consultation.

This is just for educational purposes, and I am not making any specific recommendations. This is simply a guide to assist you in thinking about your own personal position, how much risk you are willing to take, and what your expectations are.