It’s The End Of The World…Again
Turn on the daily news and it’s the end of the world, a crisis of confidence, the market is unsustainable; politics is even worse. How many times have investors heard that, only to look in the rear view mirror less than a year later and realize the price they paid for standing down?
We’ve all heard the saying, “You buy when there’s blood in the streets.” Long time market analyst Michael Williams believes the end is always near. Followed by a great new beginning.
“We all remember the crash of Oct 19, 1987 in our careers, but do you remember the very next day the Dow opened up 200 points higher,” notes Williams, a partner with Advisor Revolution.
Advisors have to turn off CNBC, recycle the WSJ and ignore the voice inside their head that reminds them, “this crisis has never been this bad.” This is different. It’s always different. But there is one thing that makes them all the same. After every crash, the market goes even higher.
Williams names a few such crashes in a webinar he conducted with colleagues from Advisor Revolution on Thursday, March 2.
In the early 1990s, the market collapses. The Asian Tigers are finished. How bad is it? It’s “never been this bad”. The world is too connected now. When one domino falls, all hell breaks loose. Investors who gave up on the market for a few years back then lost a chance to make up big time for their losses.
In the 2000-2003, the dot com bubble crashes. Investors called their advisors and told them to sell. They sold in 2003 and sat in cash and money markets. The market fell again in 2008-09 because of the housing bubble. It was a disaster. People dared calling it the Great Recession out of fear of calling it the Great Depression 2.0.
“A year ago this week we all felt dread,” he says, recalling oil under $30 a barrel and headlines proclaiming the death of American shale oil companies. It was the worst start the market had in roughly 80 years. But after the quarter was over, it was the best quarterly come back in 80 years.
“We’re all seeing red on a screen as financial advisors and we are in panic, wondering when our clients are going to call us because their portfolio is falling apart,” says Paul Durso, a partner at Advisor Revolution. “We are fooling ourselves if we think we can consume all this fearful content and that it won’t impact our practices,” he says.
Both Durso and Williams say that RIAs need to keep their eyes on their individual clients long term investment needs. How much does a particular client need to earn each year in percentage terms in order to meet their retirement goals? The noise will always be there. But in that sonic boom of negativity is when investors with long term horizons need to buy into the market, not sell out of it.
The Advisor Revolution webcast, “Economic Growth Waves & Surprises Ahead,” focused on demographics and the firms financial services platform that gives RIAs a better sense of the percentage of gains their clients need to meet their retirement goals. WATCH THE REPLY NOW.