1792 Alysheba Way, Suite 201, Lexington, KY 40509
FINRA | Broker Check | SIPC

Questions & Quotes

This week, we’re going to address the second most popular question I’ve been receiving lately, right behind “what about the election?” That question is: “Should I consider cashing out and staying in cash for a while with what’s on the horizon with…?” Fill in the blank as to what’s causing you anxiety: the election, Covid, the second wave of Covid, Trump, Biden, China, unemployment, no football (for you Big 10 and Pac 12 fans), masks. That should about cover it! Hopefully your blood pressure isn’t up too many points. 

Before I go on, I want to preface this newsletter by saying that my comments today are general observations and aren’t specific advice for your accounts or your investments. I’m just talking about the markets in general. 

Two of my favorite quotes regarding money and investing keep running through my head lately, and I want to share them with you here. The first is from Peter Lynch back in the 1990s: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” I think it’s appropriate to talk about this quote now in light of the above list of anxiety-producing news items. The reality is that there will always be something to worry about. 

As a professional investor for the last two-plus decades, I believe the number one mistake I see investors make is focusing on the macro problems instead of on the true opportunities that may exist in the companies within their investment portfolios. For example, many people today are worried about the pandemic instead of focusing on what changes the pandemic is creating and what potential opportunities are created because of those changes. 

That’s what I do for a living: I look for patterns, and I look for changes. Whether in consumer behavior, workforce, travel & leisure, or healthcare, there are always patterns and changes occurring, and in the margins is where the opportunities are. I’m always looking for the best ways to allocate a portfolio not only for your retirement income, but so that you could create lasting wealth for the future generations of your family. 

We celebrated 15 years of Family Financial Partners this month, and one change I noticed this year is that we all forgot our anniversary! It slipped Alex’s and my minds both, and we completely forgot to congratulate each other. I can finally understand how, after a number of years, you could forget your anniversary! (I wouldn’t recommend it in a marriage though.)

The other quote I want to share with you has actually been featured on our website all the way back to 2005, and through many redesigns and upgrades: “I am more concerned with the return of my money than the return on my money,” said by the ever-quotable Will Rogers. At the end of the day, every client family we work with entrusts us with their financial future. As much as we want to help your accounts grow, it is just as important to take action to protect your principal. Although I reserve the right to change my opinion in a heartbeat, I have believed throughout my career the old adage that you shouldn’t fight the Fed. There will always be concerns, but one concern I don’t have is whether the Fed has the markets’ back. 

Maybe I could make a name for myself by calling the top of the market, or patting those on the back who say “let’s go to cash and wait for the crash,” but I’m doing the tougher thing and waiting for the market to work its magic. As long as the Federal Reserve is actively supporting the financial markets – and it is – you’re not going to see me become Chicken Little and cry that the sky is falling. 

Now, don’t take that to mean that the markets will only go up. Markets gyrate, and regardless of the pandemic, a correction of more than 5 percent and one of more than 10 percent is typical every year. I think it’s safe to say we saw the 10 percent correction in the first quarter of this year! But with a quarter-and-a-half to go in 2020, could we have another correction? Sure. The team at Family Financial Partners has been actively checking your portfolios, and if your portfolio could be affected by volatility in the next 18 months, we’ve tried to reach out to you to discuss. If you’ve been on vacation and received a voicemail or email from us, I would advise giving us a ring. It could be important.

If you haven’t gotten a call or had your quarterly update meeting recently, we believe you don’t need to be overly worried about market volatility and will be okay based on the calculations we’ve done of your withdrawals and cash needs.

Some of you only have traditional brokerage accounts and do not have actively managed investment accounts with us. If you don’t have an Envestnet account, you can stop reading. Or, if you think it sounds cool, read on to learn more and give us a call with questions. 

Every position in your actively managed Envestnet portfolio is monitored internally to identify stop losses for those positions. We have an ongoing internal dialog with our investment team at Family Financial Partners whenever one of the companies we’ve invested in isn’t performing how we’d like. As we review these on a daily, real-time basis – which we do – we make decisions to exit, add or trim the position when needed.

Just like a gardener looking at a flower bed and anticipating that a storm is coming, but not knowing how bad that storm will be, if we feel there’s more risk than reward, we’ll do some pruning. The gardener might trim the mature daffodils and roses and make a centerpiece the whole family can enjoy, rather than risking a yard full of destroyed petals the next day. We apply the same concept. There’s always a sunrise, and sunset, and in between, something to worry about. 

My point is that this a daily, even hourly conversation we have with ourselves and in our heads. You’ve hired us to do this for you. If we ever see any changes we feel could affect your portfolio in the long term, we’ll do everything we can to address them. Thank you for entrusting us with your hard earned assets. Please let us know how we can help you or your friends and family members with their financial needs.

Scroll to top