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Registered Investment Advisor
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Special Edition: Coronavirus Bear Market
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As the country is dealing with the coronavirus, and the stock market officially in a Bear market now, we wanted to send this newsletter with some information that people may find useful.
We have a few specific sections touching on related topics to this. Here is what follows:
- The importance of why we focus on financial planning with our clients – exactly for situations and times such as this. While we did not know this specific event was going to happen, we assume there will be Bear markets, and plan and account for it accordingly.
- Market corrections: How much impact do they have?
- A piece put out by AMG Funds, Keep Calm and Remain Diversified. Even though it is a few pages, they are interesting slides and relatively brief, and great for keeping perspective.
- How we are prepared to handle this situation personally and professionally.
Please see below for more details on all these topics. As we will reiterate towards the end, but will state here at the beginning, please do not hesitate to reach out to us if you have any concerns. We are here to help you through this and look to keep everything in perspective and hopefully reassure as needed.
We are available and look forward to going over your specific financial situation and plan whenever and however needed: email, phone, appointment. Whatever works best for you
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Hang in there, we are with you and will get you through this as needed.
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The importance of why we focus on financial planning with our clients - exactly for situations and times such as this
Financial planning can best be described as the architectural schematics of your financial life. Before you build a new building, it must be designed and approved to insure it can withstand the stress of the weight, surrounding weather, etc.
The reason we spend so much time attempting to understand your spending habits, income sources, tax treatment, goals and objectives is to understand what the income needs will look like now and in the future. The first thing we discuss is the importance of all investors having a proper emergency fund. That emergency fund, at a minimum should cover at least 6 months of expenses, and generally we recommend one year. The reason we do that is we want to insure that our clients have enough liquidity to help ride out market disruptions, such as we are currently seeing. We then structure a portfolio that will likely outpace inflation enough to maintain your lifestyle, and yet still be able to weather the inevitable stress of extreme market turbulence.
This type of planning is vital to understanding how to allocate risk across various accounts. As most will hopefully remember, as we ran your initial retirement projections, we then asked to review them annually and we examined a range of probable outcomes. One such outcome is the “
worst case
” scenario, which is an approximate 5% statistical probability. Such outcomes already assume more severe results than what we are currently experiencing. So in essence, these type of events are already baked into the assumptions. Knowing that we have already accounted for this should hopefully help you rest easier during these turbulent periods. If you are still concerned, know that our doors are always open, as we pride ourselves on being available to our clients in a time of need. We encourage you to review with us these projections every year to insure you’re are still on track to meet your lifestyle goals.
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Market corrections: How much impact do they have?
As investors work their way through the latest round of market volatility, this time driven by the coronavirus, a number of fears often arise from investors. Questions such as:
- Is it different this time?
- Do I have time to recover now that I’m retired?
- How long does it take to make my money back?
These are common questions which are not unique to this particular market downturn. And each one has an answer. Please
click here
to access the article, which is also on our website, listed under Articles > Our Articles.
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Keep Calm and Remain Diversified
AMG Funds has put out a brochure, that even though it is a few pages, they are interesting historical slides and relatively brief. The charts tell a compelling story to reinforce that there have been many downturns before, and while during the time it may look bleak, as long as people do not panic, the
recovery time is not long, and then also have proven to be beneficial times to have been invested for the long term.
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If you look at the chart above, you will see it references the most recent Bear markets prior to this. The chart examines how a "Diversified Portfolio" (60% stock, 40% bond) allocation performed vs. the S&P 500 Index which would be 100% stocks. As you can see, during the Bear Market of 2000-2002 the S&P 500 Index was down -44.73% and took 49 months to recover. The Diversified Portfolio was only down -13.72% and only took 10 months to recover. If we look at the Financial Crisis of 2007-2009, the S&P 500 Index was down -50.95% and took 37 months to recover while the Diversified Portfolio was down only -33.78% and took only 19 months to recover. Clearly both periods were painful for both investors, however the value of diversification can clearly be seen and the good news is that in both cases which were Bear Markets, the recovery came in a relatively short period of time. Obviously, with diversification, and protecting some of the downside, the recovery can come sooner.
Please
click here*
to access the full brochure, which is also on our website, listed under Articles > Guest Articles. *
Please note, when you get to that webpage on our site, you should then look below the AMG logo, and click on the url below that.
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How we are prepared to handle this situation personally and professionally
Personally, we, like now most other people, are being very conscious to wash our hands more frequently to the standard that has been recommended (minimum twenty seconds, between fingers, under nails, etc). Likewise, we are being very cognizant to keep a good social distance, at least for the time being.
Professionally, we are of course doing the same things, and even though we do not want to be rude, we are currently forgoing shaking hands as we meet people. Before and after each appointment, we are sanitizing the chairs, armrests, and desks.
In the case of a quarantine situation, we each are able to securely access at home the necessary information to trade, as well as review accounts, and update and modify plans, and to also have calls with clients to go over the same information that we can access at our office. Along the same line, while we feel comfortable meeting with clients at our office, should a client not feel comfortable and would rather stay at home themselves, we are happy to do our review via phone as well.
While we love meeting clients face-to-face and find it more enjoyable than not being in person, we also want everyone to feel comfortable, and do what is right for them.
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Please keep in mind...
We are in the office, if you have any concerns, questions, we welcome them all and do not want anybody worrying unnecessarily
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If you have any concerns about this, or any other financial subjects and how they may relate to your own financial circumstance, please reach out to us at the contact information below:
Sincerely,
This communication is from
Landmark Wealth Management, LLC
, a Securities and Exchange Commission Registered Investment Advisory firm. The information in this email is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax, legal, or investment advice from an independent professional / financial advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Information and use of materials contained in this email, including text and attachments, is confidential and is for the use of the intended recipient(s) only. If received in error, you are hereby notified that any dissemination, distribution, or copying of this communication, or any of its contents, is strictly prohibited. If you have received this communication in error, please reply to the sender and delete the original message and any copy of it from your systems. Be also advised that email communications are not secure. All e-mail sent to or from this address will be recorded by the Landmark Wealth Management, LLC email system and is subject to archival, monitoring, and inspection pursuant to securities regulations. Please direct any matters regarding this policy to
info@landmarkwealthmgmt.com
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Landmark Wealth Management, LLC
900 Walt Whitman Road, Suite 208
Melville, NY 11747
(631) 923-2485
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