I’m going to start this blog with a very short allegorical text written in prose. I feel it resonates perfectly with a client and advisor relationship, so please enjoy. I’m sure many of you have read it before and later I’ll explain why it appears here. If you know the story, and/or are pressed for time, please continue reading the rest of the update that follows the allegory.
One night I dreamed a dream.
I was walking along the beach with my Lord.
Across the dark sky flashed scenes from my life.
For each scene, I noticed two sets of footprints in the sand, one belonging to me and one to my Lord.
When the last scene of my life shot before me I looked back at the footprints in the sand.
There was only one set of footprints.
I realized that this was at the lowest and saddest times of my life.
This always bothered me and I questioned the Lord about my dilemma.
“Lord, You told me when I decided to follow You, You would walk and talk with me all the way.
But I’m aware that during the most troublesome times of my life there is only one set of footprints.
I just don’t understand why, when I need You most, You leave me.”
He whispered, “My precious child, I love you and will never leave you, never, ever, during your trials and testings.
When you saw only one set of footprints, It was then that I carried you.”
Margaret Fishback (Antolini)
I enjoy this story because there are times in our lives when we need more support than we can ask for. And sometimes we actually get that support directly and/or indirectly when we need it the most. So why do I bring up this great life story in the realm of our client/advisory relationship?
First, please note that I certainly do not have a god complex. Secondly, I am no better a person than you are. I bring up this story because it is my job to help keep you from making financial decisions that could be detrimental to your wealth.
You don’t pay me to make the markets go up. Rather, you pay me to keep your investments properly diversified.
You don’t pay me to beat an index or time the market peak(s) and drop(s). This is impossible! On the contrary, you do pay me to help make sure you are not reacting (through fear or greed) to the drama generated by our wonderfully sensational 24/7 media frenzy.
You also don’t pay me to know with any certainty how much your account will or will not grow in one, three, ten, or thirty years. What you should expect from me is a goals-based plan that we can continually monitor to help you achieve your personal and financial goals in as many years.
Finally, I bring up the “Footprints” passage and my aforementioned duties to you as your advisor because of our recent global market conditions. We all know that greed and fear are the two killers of investment returns. But did you know that a few weeks ago (Friday, August 21, 2015), the S&P 500 stock index dropped 3.19%, and the NASDAQ was down 3.52%.1 Yes, the market has been ablaze with volatility and virtually every sector of the market has been moving a lot more than you’ve become accustomed to over the past 5½ years. And it isn’t necessarily in the direction you want!
Without getting into complicated explanations for the recent increase in volatility and subsequent market drop, here are a few news items you may have been hearing about that may be partly attributable to the cause: Greece on the brink of default, the Federal Reserve talking about increasing the Federal Funds target rate, China experiencing a dramatic slowdown in its economy, China devaluing it’s yuan, and increased oil supply causing a drop in the cost of barrel to slightly below $40. So what does this mean for you?
If you are my client and have trusted me to invest your family’s money appropriately and suitably to match your goals, then there may not be much we can or should do at this time. Your portfolios are created and managed to your risk tolerance and time frame. Volatility (the up and down movement of the market) is already accounted for and part of that plan. We monitor your investments and practice care in selecting managers to exercise control over your account based on your personal objectives.
It is perfectly normal to want to run and hide when markets like this test your threshold of pain. I want you to remember that I am here for you; call my office, ask me questions. Communication at times like this can help us avoid unreasonable expectations. We can even make adjustments to your plan if your personal situation has changed.
Thank you for trusting myself, my firm, and the work we do to help you achieve your goals. Like “Footprints,” I will help carry you through these times of emotional market distress!
1(2015, August 21). Retrieved from http://www.finance.yahoo.com
-The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by NPC. To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Indices are unmanaged measures of market conditions. It is not possible to invest directly into an index. Past performance is no guarantee of future results.
-There are no guarantees that any managed portfolio will meet its intended objective.
Neither asset allocation nor diversification can ensure a profit or prevention of loss in
times of declining values.