Every Minnesota resident knows this weather pattern. Right after a snowfall, the temperature drops.
The same thing can be said for stock market all-time highs. The glowing stock market headlines can fill your day. You can also read from every possible stock market guru predicting the next great stock market crash.
I have no idea when the stock market will crash. No one else does either. Predicting is a fool’s game. The most important thing is that my client’s know that we have a plan of attack when the stock market heads lower.
Another thing that my clients know is that I will not use the investment management concept of diversification to make excuses for their stock market losses.
Diversification is supposed to help individual stock market investors avoid the pain and suffering of stock market declines. It might work in concept. It looks good and sounds good with a PowerPoint presentation.
My clients don’t care about presentations. They only care about investment performance results. A big part of investment performance is the preservation of stock market principal in the early stages of a stock market decline.
I don’t have working clients who can stand another round of stock market losses like they suffered in 2008-2009. They need a plan of attack WHEN the stock market crashes again; not IF the stock market crashes again.
Remaining 100% invested in the stock market at all times for the sake of diversification is a Wall Street sales practice.
My clients are willing to risk missing a stock market top. I am the first one who tells them that having all their money invested at the top of the stock market cycle is not possible.
My clients are much more interested in avoiding the large part of the stock market declines. They don’t have many more working years left in order to recover stock market losses.
Diversification is a sales job that keeps you fully invested all the time. You need to make sure that is exactly what you want to do with your stock market investments.
With the stock markets again at all-times highs, now is the time for that decision.
Ric Lager
Lager & Company, Inc.
