Promises

Promises

You promised yourself that if your 401(k) and other investments recover from the horrifying depths of the 2007-2009 bear market bust, you'd sell everything and go to cash. "I'll never go through this again!" was your mantra.

Now, before you read another word, this is aimed at baby boomers' experience at that time and right up to this moment, but investors of all ages need to be reminded - or learn - the lessons below.

So, here we are in a market serving up fresh new record highs almost daily. Your investments recovered better than ever. Getting back to even seems almost as long ago as the S&P 500 nadir of March of 2009. Going to cash when your accounts got back to their old 2007 highs didn't happen, regardless of that promise you made a few years prior, because your panic attack was long gone. I say GOOD FOR YOU!

You have to ask yourself if maybe that was the wrong promise to make, which made keeping it a terrible idea in hindsight. Here's a replacement: I promise to put into practice the lessons I learned during the last bear market and about myself right now.

Believe it or not, YOU are not the odds on favorite to be the one to call the top of this mega rally. YOU are also not the odds on favorite to call the bottom of the next bear market. We are right this moment 10 years past the old October, 2007 highs. You're 10 years older. It's a given that as we age, our investment portfolio risk metrics should be dialed down, unless you're Warren Buffett, that is. I'll share a little secret with you - I meet with boomer-aged prospects often and most have investment portfolios that are nowhere near matched to their risk tolerance.

Sometimes it's because of their former advisor and sometimes it's their own fault. Usually, they're taking on more risk than my risk assessment scoring would dictate. And sometimes they just want a second opinion, in which I'll be the first person to tell them if they're in good shape and send them on their merry way. It's all fine by me.

Here are a few things to keep in mind:

Owning stocks that pay dividends is not a strategy. It's just an asset class.

Going for every penny of potential return out of a stock or a stock market is not asset management. It is turning a blind eye to risk and ignoring the history of market cycles.

Your fellow investors are the biggest cause of volatility. Rarely, if ever, should you pay attention to them.

You're 10 years older since the last recession and bear market, which means you have either retired by now or you have fewer working years ahead of you.

Acting out of panic is not a strategy. It is a sure way to live a long time with regret.

Diversification is a tool that helps mitigate a soured investment choice in a portfolio of different kinds of investments. It does not protect you in a down market.

When an advisor moves you in and out of positions quickly and you're making money, it's called trading. When you're losing money, it's called churning. Since the odds of you or your advisor doing this consistently well are extremely low, it's really all just churning.

Investing according to your age, risk tolerance, financial goals, and a litany of other factors is important so you won't have to make hasty decisions when you get nervous about a down market. It's called being proactive, not reactive.

In bull markets past, many investors thought "I'm investing conservatively. I'm in all mutual funds". Today, many say the same thing, but now they're in index funds. Yes, really, people do say that sometimes. Needless to say, nothing could be further from the truth.

I won't go through the litany of market risks that investors face today; we've been hearing an endless drumbeat of those for years now and none of them so far have become the market danger they were once hyped up to be. But we do historically have corrections, bear markets, recessions, and even depressions. Economic and market cycles haven't been repealed, although we forget this in times of fear and greed.

Italian philosopher Machiavelli said in The Prince:

"War should be the only study of a prince. He should consider peace only as a breathing-time, which gives him leisure to contrive, and furnishes as ability to execute, military plans."

In other words, prepare for the next tough time when times are good. Right now, investors have never had it so good like we do right now.

Thanks for reading,

Mitch

The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading industries of the U.S. Economy. Indexes are unmanaged, do not incur management fees, costs & expenses, and cannot be invested into directly. Past performance is not a guarantee of future results.

I opened ClientFirst Strategy, Inc. because I believe that the only way to help my clients potentially achieve their goals is by offering unbiased advice & investment management expertise. To my clients, thank you for your continued vote of confidence. If you are not a client but would like to explore the possibility of becoming one, I invite you to call me directly, visit my website, join my email list, and/or connect with me on social media.

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All the views expressed in this report/commentary accurately reflect our personal views about any and all of the subject securities or issuers and no part of our compensation was, is, or will be, directly or indirectly related to the specific recommendations or views we have expressed in this report. This material is not intended as an offer or solicitation for the purchase of sale of any security or other financial instrument. Securities, financial instruments, or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from securities or investments mentioned in this report may fall against your interests, and you may get back less than the amount you invested. The information contained in this report does not constitute advice on the tax consequences of making any particular investment decision. You should consult with your tax adviser regarding your specific situation. Diversification is a method of managing risk and doesn't protect against loss in a down market.

Mitchell O. Goldberg, AAMS, President | Investment Professional

OSJ Manager

ClientFirst Strategy, Inc.

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(D) 631-920-6622 (F) 631-920-6624 (C) 516-818-0338

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