Back to Library



If It's Not One Thing, It's Another

Coming in to work on Monday morning to a pile of sticky notes is frustrating. It's never whether something went wrong. Rather, it's what went wrong, and how I need to respond. Typically, there is a maintenance and repair issue to deal with. Sometimes I learn for the first time of a negative social media review. Worst Monday ever? Finding a police officer's report sitting on my desk. I'm confident you know what I mean.

Investors face the same Monday morning trials that proprietors face. In no particular order of crises, I offer the following examples.

Financial Contagions

The global Great Depression, preceded by the stock market crash of 1929, is a distant example of the effects of contagion on an integrated global economy. There are many modern examples, too. In 1997, it was the Asian financial crisis, triggered by the collapse of the Thai Baht. That crisis eventually made its way to Russia and Brazil. In 2015, it was China who devalued their currency, leading to a loss of five trillion dollars in global stock market value.

Financial contagion also happens at the domestic level, usually due to the failure of a bank or other financial intermediary. The crisis of 2007–2008 is thought of as the most severe since the 1930 Great Depression. By March of 2008, the investment banking firm Bear Stearns had failed and was being rescued by the U.S. government. That in turn triggered the largest U.S. Chapter 11 filing ever by Lehman Brothers, and the government rescue of American International Group (AIG).

Geopolitical Events

We don't need to go back even a year to collect a meaningful list of geopolitical crises. In reverse order, North Korea's recent ballistic missile firings over Japan put markets on edge. Threatening to take out Guam, not to mention major American cities, Pyongyang's erratic leader continues to rattle global markets. Late spring/early summer saw yet another series of terrorist attacks in France and Great Britain. And in April, the U.S. military attacked a base in Syria, leading many to assume a full-fledged attack would follow.

Natural Disasters

As I write this article, cleanup is just beginning for Hurricane Irma. While it is too early to know its exact cost, it's fair to question the market impact given its path of destruction. This is right on the heels of Hurricane Harvey, which looks to be the costliest natural disaster in the history of the U.S. With road, infrastructure and building damage typical after disasters, local businesses can be shut down for some time. Every year we face new disasters that test our resilience.

Time is the Best Way to Capitalize on the Stock Market's Gains

Putnam Investments conducted a 15-year study ending in 2016. In it they found that missing the 10 best days of stock market returns reduced the annual return of the Dow Jones Industrials Average from 7.28% to 2.60%, cutting an investor's total dollar return by almost half. By trying to predict the best time to buy and sell, an investor also risks missing the market's biggest gains. It turns out that the best way to capitalize on market strength over time is simply staying in the market and doing nothing. Major political and economic events are opportunities to review plans, challenge outlooks, and re-confirm goals and strategies. They are not selling opportunities. Quite the contrary, as Warren Buffet is known to profess: "You have to be greedy when others are fearful."

Climbing the "Wall of Worry"

Investopedia defines a "wall of worry" as the financial markets' periodic tendency to surmount a host of negative factors and keep ascending. While the "wall" may sometimes consist of a single financial, geopolitical, or natural event, it more commonly is built from concerns on multiple fronts. The markets' ability to climb this wall of worry reflects investor confidence that these issues will be resolved at some point, yet another great reason to "stay the course" in the face of bad news.

Roseanne Roseannadanna, a recurring character on Saturday Night Live was fond of saying: "It's always something." That couldn't be truer about life and investing. Just remember to not let those "somethings" distract you from your long-term financial plan.

REFERENCES:
Putnam Insetings:
Investor Education: Don't Miss the Market's Best Days



Click here to view our Disclosure



WARRANTIES & DISCLAIMERS

There are no warranties implied.
Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

View Disclosure
WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

Contact Us Today

Reach us directly at 800-825-0616
or by using the contact form below.

Your message has been sent. Thank you!
Cancel