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When to Hire a Professional

It’s been a good year for investors. Take a look at how your portfolio performed. 

For all conversational purposes, 2017 has been a cakewalk for most investors. All you had to do was buy an index fund, and, depending on which one you bought, your investment may be up. For me to suggest that you had a diversified portfolio that lost money is ludicrous. Except for the people who own just energy stocks. They’ve lost. But, energy was the big winner last year, so they’re fine over 24 months.

If you have a do-it-yourself portfolio and are a moderate growth-oriented investor, and your portfolio hasn’t performed how you’d like it to, then we should probably talk. Something is wrong in what you’re doing or the choices you’ve made to get you where you are. In fact, I imagine that all of you who have other professional advisors probably love that person right now, just as I know a few of you who want to high-five or fist-bump me. Let me remind you in case you haven’t heard – what you’re celebrating is that your portfolio went up, and I’m all for that. But let’s stop at “good job” and not put anyone’s name at the end of that. I don’t deserve the credit for increases in your account. And I’m also not going to take the blame in a market collapse!

For those of you whose accounts may have underperformed, I’m guessing you’re a DIY-er, where you have a whole bunch of stock in one company. Maybe you inherited that stock and you could never sell granny’s inheritance, or maybe that stock is through your company and it isn’t having a great year, like IBM, Toyota, Kroger, or Kohl’s. If that’s the case, I get it. 

But perhaps you’re looking for a change to your current strategy – now could be the time to consider talking to a professional advisor. We spend as much time wearing the financial planning hat as we do wearing the professional advisor hat. You and previous generations of your family worked hard, and we want to help ensure your money is working hard too. 

If you are considering seeking professional advice, one of the most important things to understand is that we strategize for up and down markets. There are some advisors that will do an asset allocation for you, putting your assets into a variety of investments, and simply hold them for the foreseeable future, only adjusting that strategy if you need to liquidate those funds. Ups and downs in the market have no bearing on an overall strategy of buy and hold. And there’s nothing wrong with that, if that’s what you want. Other advisors are more active – many hire secondary asset managers who manage your portfolio in a less transparent manner. Because these are based solely on whether the markets are up or down, you’ll love that manager when the markets are good and fire them when things are down. 

Then there’s the way we manage money. I’ve been at the investment game long enough to have tried these two approaches. In strategy A, as long as you hold in a down market, you should be fine when the markets eventually recover. In strategy B, as long as the asset manager makes the right decision in a falling market, you should be okay. But you may become fearful due to that lack of transparency. It’s scary to see your portfolio falling when you don’t know why. It’s easier when you can see that you’re invested in good companies that are just having a bad day. 

Our strategy for all of our client families is to own investments that are fairly easy to understand, provide for liquidity if you need it, and provide complete transparency to take the question of “what do I own?” out of the equation. From there, to figure out how much you need to own, we simply figure out how much risk you’re willing to take, and that goes beyond just gains and losses. What are your lifestyle goals? What do you want your money to do for you? Can you be patient? Do you want to use up all your money, or pass it on to future generations? 

Then, we help you select a portfolio that meets your needs, so you know what you own and why. We try to take the fear out of investing. Most importantly, we actively manage those positions for all of our client families, in real time. If there’s a change in anything – not just the overall market – we can try to determine if it’s just a bad day, or if it might be the start of something bigger. 

For example, we’ve seen a rotation out of FAANG and Nasdaq stocks and into US-based transportation, finance and retail companies – even the ones Amazon is supposed to kill – as Wall Street is anticipating that tax reform and stimulus measures will benefit those companies. People are selling companies that are growing the most and buying companies with challenges as part of a normal rotation. Last year the same thing happened. Had you sold last year, you might have saved on those particular stocks, but you’d also have missed gains on the growth. I’m no rocket scientist, but that’s pretty good. And of course I’m not saying this will happen again either. 

But consider this: we bought Kroger stock at a 52-week low in late June of this year, when Amazon was going to wipe them out. Well, Kroger is apparently not dead yet. The point is, we make changes when changes are needed, whether in an up or down market. We buy and proactively hold, and if something doesn’t perform like we’d thought, we sell and move on. Most people find this refreshing. 

Whether you’re working with another advisor or you’re a DIY-er, take some time to look at your portfolio and its performance over the last year. It might be time to give us a call. 

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