There’s a scene in the Western Classic How The West Was Won where the herd of cattle is spooked and changes direction, flattening the nearby town in a thunderous stampede. It didn’t take much to get them to change direction, but when they did, the result was carnage. I reference this example not as a movie critic, but as your advisor as a way of drawing attention to what happens when things go the other way.
Markets have performed well -too well really, based on their fundamentals. To be sure the global economy is in the best shape it’s been in in 10 years, but stock markets have been performing better than the underlying fundamentals. The danger in this of course, is that when even a relatively small number of individual and institutional investors catches on to this, the effect can be a market stampede that tramples anything that gets in its way. This week has seen large declines in stock markets of more than 1% a day. Whether this is a start of something more, only time will tell.
So, what is an investor to do? The answer is to go back to the core positions in their portfolio and draw comfort that our approach to protecting and building wealth for you hasn’t changed. Our style discipline means that there is significant downside protection built in to our model portfolios, ensuring that your savings are not at risk of being flattened.
You’ll find the movie on iTunes for sure. Watch the scene - because we sure have. Which is why when we manage client money, avoiding this outcome is our overriding objective. A steady and measured approach is always the best approach to wealth management. Pass the popcorn.
The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Investment Services Inc. This publication is solely the work of Martin Weiler for the private information of his clients. Although the author is a Manulife Securities Advisor, he is not a financial analyst at Manulife Securities Investment Services Inc. This is not an official publication of Manulife Securities. The views, opinions and recommendations are those of the author alone and they may not necessarily be those of Manulife Securities. This publication is not an offer to sell or a solicitation of an offer to buy any securities. This publication is not meant to provide legal, accounting or account advice. As each situation is different, you should seek advice based on your specific circumstances. Please call to arrange for an appointment. The information contained herein was obtained from sources believed to be reliable; however, no representation or warranty, express or implied, is made by the writer, Manulife Securities or any other person as to its accuracy, completeness or correctness.