The decision you make can matter

In investing, as in life, it is important to understand that every single decision you make can be important to your future well-being. That is why a great deal of thought and process should always go into any decision involving your investments. As we have stated on numerous occasions, do not let your investing logic and process be swayed by media reports and hot topics.

One of the mistakes we are seeing in this recovering market is NOT to make changes to appropriate investments. There seems to be instead an attitude of "let's ride along with the markets." However, the investment choices that you made before the big market fall are not necessarily the same ones you should be considering in its recovery.

The United States has had severe or secular bear markets, often linked with financial crises, averaging more than one per decade for the past 150 years. Even during the golden period of 1982 to early 2000, there were several crises, such as the combined real estate, savings and loans, and junk bond disaster of 1990, as well as the 1998 Long-Term Credit debacle. And while most such markets unfold slowly over time like a disease, only the October 1987 crash was more like having a tooth pulled without anesthesia - painful, but mercifully quick.

We've recently experienced this decade's financial crisis. But that does not mean that another crisis does not lurk out there - maybe not financial, but some other asset or sector.

The point of this history lesson is not to open old wounds but rather to explore Santayana's dictum: "Those who do not learn from history are doomed to repeat it". After the most recent bear market, we want to ensure investors don't simply carry on making the same mistakes, assuming another bear market won't happen again. We still believe that if you are going to invest, you should have a healthy respect for the investing process of risk management: never assume that markets go up nor down forever. You need a sound process to handle each situation and should never suppose that it will be "different this time"

Recovery investing can differ from investing in a steady market. Now is a perfect time to re-examine each of your holdings, your strategy, and your process. If there is ever a time to change your approach, it is generally during market recovery.

If you would like to take this opportunity to review your current investment strategy, feel free to contact our office for an appointment.