By John Halterman “It’s not the 15% to 20% declines that cause the most trouble, it is the -40% to -60% that take so long to recover from.” – Steve Blumenthal If you’ve opened a newspaper or kept an eye on the markets lately, you know that the last few weeks have been crazy. Volatility is back, and it’s back with a bang. U.S. markets have never fallen this far this fast from an all-time high. Through March 17, 2020, the S&P 500 Index is down 25.82% YTD, down 19.14% MTD and has annualized just 2.06% over the last three years. The S&P MidCap 400 Index is down 35.09% YTD and -6.74% per year the last three years. The S&P SmallCap 600 Index is down 41.16% YTD and -7.99% per year the last three years. As of Wednesday, March 18, the market is down an additional 9%. Pessimism is arriving quickly. I have no idea if we will see -60%. Much depends on the U.S. government’s fiscal response to the crisis. Regardless, market volatility scares many people and rightfully so, especially those within the retirement redzone. It’s never a fun experience to watch the markets go on their own personal rollercoaster ride. The Good News: Conventional “Buy and Hold” investing preaches to weather the bear market declines because eventually the market will recover. In a volatile environment like we’ve seen this year, the “eventually” portion becomes a tricky subject. Investors in the retirement redzone simply can’t afford to be hit with catastrophic bear market losses. The risk around sequence of returns is too impactful for these investors that need to hold on to their capital. Our tactically managed advisory accounts with TD Americatrade are designed specifically to address these concerns. Our investment process is driven by technical analysis and not emotions. Because of our process, most of your assets had already been moved out of the market. At this point, our opportunistic portfolios do not have any positions in the stock market. Review of Our Process: Now is a good time to review some of the basics of our investment process. At the center of our philosophy is the fact that bear markets are inevitable. Since 1926, there have been eight bear markets. The average Bull Market period lasted 9.1 years with an average cumulative return of 480%. The average Bear Market period lasted 1.4 years with an average cumulative loss of -41%.1 For that reason, we believe that skipping the worst the markets can throw at you (rather than just sit and wait it out) is a more reliable way to increase your investment return over time. In other words, it’s more important to protect against losses than it is to focus solely on gains. That’s why, before the worst of this volatility ever started, we were: 1. Analyzing market trends to determine whether the individual investments and asset classes in your portfolio – along with the market as a whole – were trending up or down. In this case, the answer was down. 2. Obeying “the rules.” As you might remember, the rules determine at what point in a trend we decide to buy and at what point we decide to sell. For example, if an investment trends down below a certain price, we follow “the rules” and sell. Period. If an investment trends up above a certain price, we buy. Recently, the rules dictated that we sell and move to cash, so that is what we did. As a result, we’ve been able to sit on the sidelines as the markets ride the rollercoaster. As your wealth advisor, our job is to add value in the worst of times. This is what you pay us for – to manage your investments in an unemotional, unbiased, rules-based way. That’s why it’s in situations like these that we feel we bring the most value to you and our other clients. Of course, market volatility can still be unsettling. So, remember, we’re here for you if you have any questions or concerns. Please feel free to give me a call @ 304- 626-3900 at any time. I’m always happy to talk to you! One more thing, right now a lot of investors are reacting emotionally – and that primary emotion is fear. So, if you know of a friend who is frustrated with the traditional “buy and hold” approach, please have them call us. We would be more than happy to address their concerns. In the meantime, please let us know if there is anything we can do for you! As always, we greatly appreciate your continued trust and confidence in our services. About John John Halterman, best-selling author and nationally published blogger, has been featured as a financial guest expert on the shows of self-help gurus Brian Tracy and Jack Canfield, author of Chicken Soup for the Soul, and has appeared on ABC, FOX, BRAVO, NBC, CBS, and A&E. John is the expert host of the weekly WDTV News 5 segment “Solutions 4 Financial Independence.” As an authority on wealth management, he has been invited by hundreds of institutions such as universities, federal agencies, professional associations, and large energy and utility corporations to be a guest speaker and educational event host. Event topics include retiring ready, managing down market investment risk, how to reduce your tax burden, and transferring your family wealth in the most tax advantageous way. John is the founder and owner of Beacon Wealth Management, specializing in helping entrepreneurs, professional practitioners, and retirees overcome the 5 major challenges facing successful families. He is a warm communicator with a passion for helping people transform their financial futures. John understands the multifaceted set of financial worries people face as they become more successful and enter the Retirement Red Zone. He empathizes personally with each client and delivers a collaborative client experience that empowers people to reach their life goals. With more than two decades of experience, John’s professional credentials include Certified Wealth Strategist, Accredited Investment Fiduciary, Certified Estate Planner, Chartered Federal Employee Benefits Consultant, Professional Plan Consultant, and Registered Financial Consultant. He is also a past member of Ed Slott’s Master Elite IRA Study Group. A native of Weston, West Virginia, John served in the United States Air Force prior to becoming a wealth advisor. Today, he resides with his family in Clarksburg, West Virginia. He and his wife, Lisa, have been married since 2005 and have three amazing children. A family-oriented man, he enjoys giving back to his community, coaching youth sports, landscaping, architectural design, and playing racquetball. #Coronavirus #StateoftheMarkets #FinancialMarkets #BWMProcess #BeaconWealthManagement #JohnHalterman #JohnHaltermanofBeaconWealthManagement
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