Catastrophe in the Markets?

People are always catching forecasts of catastrophe -- shouting that stock markets are about to lose 50%, 60%, 75%.   As markets fall 30% once or twice each decade, scare-mongers on rare occasion have a point (but you can never know when).   They suggest you'll be safe putting your money with them, locking in 1%, or just buying gold, or technology, or healthcare, or private equity, or whatever "they" happen to be selling.   ...often a recipe for disaster.

A recent instance is noted in Huffington Post.  I have nothing against HP except that it takes forever to load, so I’m uninterested in waiting for its pages to appear.  Clearly HP’s primary business is selling advertising to build their revenues.  They fully admit they’re not an authority on investing or portfolio timing.

Countless times, people have asked me in the past four or five years if impending catastrophe means it's time to park investments near 1% to avoid losses.  As we'll see below, this too easily would sabotage their income-yield.  If a high-income portfolio pays 3% to 5% plus timely capital gains,  it’s tough to know when or why to dispose all for 1%.   And if you'd done so -- would you know when to re-build your portfolio of higher-income investments?  Never an angel to ring that bell!

Is FEAR relevant at all?   In fact “euphoria” is far better at indicating risks.  There's no euphoria in investment markets these days (except Shanghai).  No euphoria means "stay invested."  Markets climb a wall of worry but fall on euphoria.  Our analyst partners and research even central banks & independent economists forecast continuing and plodding - even boring - growth in our national and world economies through 2015 & 2016.  If there’s a 4% or 8% downside at some point this summer (as usual) there can be a proportionate 5% to 15% upside over the next few seasons.

Pic_ anxious senior womanFear-mongering Media?  Who do you listen to?  And what are the real risks?   One fellow with slicked-down hair has paid an interviewer to ignite fears of massive 60% loss or worse …and he aligns this catastrophe with some presumed CIA information that World War 3 is at hand.   (PS:  he forgot to say that wars generally lift equity markets!)   This fellow knows that Fear-based psychology will wrestle people's money out of their hands!   Common-sense would want to ask him:  What markets will fall?  Which assets are risky?  What's the impact really if we’re NOT investing in market-benchmarks?   But he doesn't answer that, because FEAR wants to stand on its own.   <<>>  Such commentators would sell off all your infrastructure assets, your diversified real estate, your dividend yield, your strategic income ...continuing their decades-old theme, the world is speeding to hell in a handbasket, so you might as well ruin your money with them.

If Life Income Mandates could plummet like 2008 equities -- but they don't -- you could jump into GICs paying under 2%.  We’ve designed your specific income mandates to reduce risks of other assets.    We avoid high-risk positions and fads.  We purposely reduce the risks of catastrophe that have hit the world in through the decades, and more recently in 2000-2002 and 2008-2009.

"No change right now."   Sorry it doesn't sound exciting -- doesn't get the adrenalin going -- but actually it's true that not much changes in a month or two.   Our year-to-date values are up modestly, nicely accelerated at times by some weakness in the Canadian$.  Cyclical theorists suggest what started in the low of 2009 could become an 18-to-20 year bull market.  I don’t know, as that can hide a lot of unwanted fluctuation along the way.  What I do know is the strong yield that keeps paying from globally diversified dividends, real estate, infrastructure, fixed-income.   Visit STICKY MONEY and sub-links at  http://guaranteedincome4life.ca/blog/sticky-money on mandates to safeguard wealth for Life.

Plunging credibility of TV, you-tube, paid advertising -- how would you judge an advertiser's authority and credibility ...and consider your “fear” or “confidence”?   My monthly letters distill research of RBC, CIBC, Mackenzie, Templeton, and wider sources proven to be truly credible, so I'm not speaking of myself but on behalf of our wider industry and the full strength it can bring to your financial planning and decisions.  And if you listened to a fear-monger on youtube in recent times, might you recall Sir John Templeton’s teaching that fear helps mark some of the most lucrative opportunities for your investing!   And fear also illustrates how our Life Income Mandates are absolutely distinct from other forms of equity.  So if someone on the web says markets are risky, would you truly dispose your investment in toll-highways and toll-bridges?  would you run from railroads and deep-water ports?  would you burn the commercial real estate income that is helping sustain your life-income?  What would that give you?  a pathway to collapse and poverty!

But fear becomes a health issue, and impacts lifestyle.   If one listens to such fear-mongering in the media, it may soon be healthier to sell all, avoid the heart attack, and just get 1% or 2%.  But then its guaranteed capital value will shrink annually -- and eventually there is no recovery because the cash-deposit or GIC model has no program in sight to let you recover.

So what’s the secret to overcoming noise and fear of catastrophe while investing in equity markets?   Two things.   (#1) Nick Murray’s famous point on time-in-the-markets, not timing-the-markets.  No one can forecast when markets will reach their high or low, or when key inflections will occur.  Rarely we may say it can’t get better, or can’t get worse -- but that's not today, and it's likely not this year or next.   (#2) Recognize the difference between entertainment, advertorials, and analysis:  ignore the noise!  Life Income Mandates remain the select and long-proven model to reduce market-risk while sustaining vital Income for your Life and Loved Ones.

Yours in Financial Security for LIFE!

Brian Weatherdon, MA CFP CLU CPCA CRC, MDRT.  905-637-3500 x 223
627 Guelph Line, Burlington, Ontario. L7R 3M7.   1-877-937-3500 FREE x 223
Ret.Coach SEALCertified Financial Planner.  Certified Retirement Coach.
brian@SovereignWealth.ca 
 

0 comments

Leave a comment