At this point we're in the heart of tax season, and we've either talked to you, or attempted to get you in for a meeting this year. During these standard quarterly update meetings, we've been showing you balances on January 1 versus today, and most of you are happy to see they're up. Then, we show you where you were in October, and the drop that happened at that time. Then, well, some of you weren't so happy. Then, I remind you again of where we were January 1.
Let's look back at October for a minute. October 1 was the all-time high moment for pretty much every investor in the world, and the really aggressive portfolios especially were probably at all-time highs. October through December 31 was just nuts. But, I've been through enough of them to know these quarterly crashes happen. I also know that some people are just now seeing their December 31 statements, and these are also the folks who probably haven't come in for a meeting yet.
Anytime the market freaks out, it's a good idea to take a longer view of things. Look at the last 13 months and see where you are. These market freak-outs are also a good time to do a Chinese fire drill of your portfolio - Where did you start? What happened? What's your current balance?
The answer to these questions will be different depending on how you're invested. If your investments are mostly outside of the stock market, then you didn't fall (or rebound) as much as more aggressive portfolios. This is also a great time to ask yourself if you feel comfortable with the level of risk you're taking.
It's been two years since January of 2016 when we had the last major market freak-out, and you've probably forgotten about it, just as you probably can't tell me what you ate back then either. But I do remember, and we want you to know and feel confident in what we're doing with your money. We know if people are confident, they'll continue to add money to their accounts, whether the markets are up or down.
People frequently ask me if this a good time to invest. My answer will always be, yes, I think it's a great time to continue making contributions, so that money is available to be invested as market opportunities present themselves.
I have always and continue to believe that we are the strongest and most innovative economy in the world, and that's why I believe we'll continue to outperform the rest of the world.
The China/US trade deal may or may not turn out to be profitable for the US, but if the market does sell off, I want you to be able to participate and buy while things are on sale. We can't place those buy orders for you if the money isn't there.
I'm not trying to time the markets, and obviously I hope it continues to rise, but nothing goes in a straight line forever. I would be irresponsible if I didn't raise a little capital so that, if and when volatility comes back and we have the opportunity to purchase great companies at a discount, we can take advantage and do that. So that's what we've done. Within our managed Envestnet model portfolios, we've trimmed stock positions and currently have between 15 and 25 percent cash / TIP bonds. This will allow us the freedom to go shopping and buy good companies at a good price as market volatility occurs.
So keep sending those contributions to your Roth or traditional 401(k) or IRA, your future "fun" fund or that education savings account, and know that, as the market presents opportunities, we'll help you take advantage of them. And if you haven't scheduled that meeting yet, please, give us a call.