As I write this Christmas Eve morning, the major indexes are all down over 1.5%, with the S&P down over 2%. With these crazy markets, it is hard to predict how the day will finish…but by all indications, the major indexes will cross into official bear territory.
For perspective, I was at Wells Fargo in 2007 when the great recession began, and the global fear was this was more than a recession, perhaps a depression or worse. Hundreds of millions of dollars came into the Nevada offices as clients fled international banks and brokerage firms on the perception, real or perceived, that Wells Fargo was one of the stronger banking institutions. Today, we sit at the end of one of the longest and strongest bull markets in history.
As we give back some of those gains, it is painful. But like recessions that wash out excesses in the economy, bear markets wash out the over extension of the capital markets.
We encourage clients to use diversification and have their portfolios positioned so their short and intermediate needs are met, and their future needs positioned to be met by what has historically been, the markets’ ultimate positive returns over longer time periods.
Many tools exist to take exposure to the markets with guard rails in place, but as with every investment decision, compromises, real and opportunity costs come with these decisions. We are here to help you understand these issues and opportunities.
Wishing you and your families much good health, happiness and very happy holidays!
Dave + Drew