Off the Rails On a Crazy Train

My reference to Ozzy’s “Crazy Train” is in relation to the heightened volatility in the stock and bond market right now. If the stock market were a stereo system (‘AirPods’ for all you youngsters), the volume would have been cranked to somewhere between level 9 and 10 yesterday, August 14, 2019. This is also an appropriate volume level for cranking “Crazy Train” on your favorite listening device!

Potential causes for this recent volatility are most likely due to tariffs (actual and proposed) with China and other countries, a freshly inverted yield curve on the US 2-year and 10-year notes, and a political landscape that seemingly cannot take a break from bashing the other side. Additionally, investor sentiment, or investor emotions, say(s) that our bull market is due for a correction, or worse, a recession, and now you start to see why market volatility is back with a vengeance.

Throughout the year we meet with our clients to discuss their ever-changing lives, their needs, and their wants. We review financial statements to see where their investments stand in relation to a comparative index and modify the asset allocation if risk tolerance and/or a client’s timeline has changed. In most circumstances, their situation has not changed.

However, a frequent phenomenon occurs with clients when markets have either recently gone up or down a lot. When account values are rising (AKA: a rising tide lifts all ships), investors forget about the investment risk they are taking and, many times, want to incur more of it to grow their assets faster. Conversely, when account values are dropping due to the stock market moving lower, investors want to pull back and sell their losses before losing even more. These two emotions are known as greed and fear…the most common emotions tied to investment risk. It is also these two emotions that can impact long-term investment results the most.

We, at Arktos Wealth Management, want you to know that we are here for you during times of volatility to discuss your concerns and fears. It was during the great recession of 2008 that I started writing blog notes to my clients, family, friends, and prospects to walk with them through the greatest market sell off in our recent history. My phones remained open and I returned emails within an hour to each and every person who was reaching out for answers. I knew it was important to remain close with my clients during that cold, dark time. And I would hear stories of other advisors going silent during this same period; the exact moment when clients needed their advisor the most.

As you may know, I have a crystal ball on my desk at the office. It is there to reflect the irony of crystal balls whereas their future-telling predictions are all but a joke. It is there to remind clients (and myself) that neither they, nor I, nor does anyone know with any certainty which direction the markets are going to go, and by how much. In general, and over long periods of time, the market trends up. But during shorter timelines, three months to three years, the market can do anything. It is those times when a well-diversified portfolio will show its resolve to protect an investor’s goals from absolutely coming apart.

If you’d like to schedule a meeting to discuss your concerns, please call or email us. We will arrange meeting via a web-sharing interface, over the phone, or in our office. Other special arrangements can be made to accommodate a meeting as well. Let’s talk…our lines our open!