top of page
  • Writer's pictureMatt P. Clements

Prepare Now for a Market Recession/Correction

Market Correction & Retirement Planning

 

The market has people pretty nervous lately!  Every day I am asked:


  1. What’s happening in the market?

  2. Is it crashing? 

  3. What will a correction mean to my portfolio?

  4. Will I still be able to retire if the market crashes?

  5. How long will it take to climb back out of a market correction? 

  6. Should I move to cash?

  7. How will I know if a recession is coming?


These are good questions and very real concerns… And there are good reasons to be unsure of the market and nervous about portfolio security – particularly if you are over 50 and either retired or hoping to retire within the next decade or so.


WHY THIS ARTICLE, WHY NOW:

I’m not a dooms-seer, nor a fear-sensationalist. In fact I am told that I am notably even-keel, proactive and optimistic. But I am also a realist who believes we need to be informed and take personal responsibility for our money management choices and portfolio structuring  – and especially now in this current climate (both economically and politically).


I will briefly highlight here some key factors I believe we all should know and pay attention to if we are invested in the market and seeking to gain (or maintain) retirement security during the decade ahead.


I will then offer a few specific steps that will help you take a proactive stance for minimizing loss and optimizing strategic gain based on your personal situation and needs.

 

MARKET SITUATION:  A RECESSIONARY CORRECTION IS COMING


For starters: DON’T PANIC  …But (for heaven’s sake) DO GET INVOLVED in the management of your money… and sooner rather than later. (Yesterday is not too soon.)



What we are seeing now in the market is similar to the patterns we saw in 2000, 2007 – and even 1929.


Know that we will experience continuing market fluctuation (and erratic seeming ups and downs) as we enter into a signaling change in the market that is historically long overdue for a recessionary correction.  


The market has been running on sensation rather than true value. This, in addition to current policy and world politics, has set the stage for a potentially larger fall, concomitant with the larger than life political upheaval.


  • What we don’t know is how long the smoking steamroller can keep going.

  • We do know that the marketplace will continue to fluctuate as it corrects into a recessionary period. (Note: Most recessionary periods last years and can take up to 7 or more years to regain losses, if your portfolio is not positioned correctly.)

 

To add a bit more socio-economic underbelly, the tenor of the times in our society right now make the market even more erratic and fear-inducing than normal up and down swings.



  • Today we are seeing systems world-wide confronted by a surprising increase in reactive fundamental authoritarianism, fear of other, and heightened financial anxiety.


  • We are seeing in our own country – and across the globe – a wary and even cynical loss of confidence in big business motives and governmental ability (or even interest) in governing with integrity for the good of its people. We are seeing populations split and divided and pitted against one another in escalating anger and intolerance.


  • There is a wave of unease underlying the lives of good people doing their good and honest work – a people who have lost a sense of secure future or protected future.


So yes, from many levels – and as a financial advisor of almost 3 decades — the market signs and signals and analytics we are seeing right now can be pretty scary indeed:   

…And especially so for those who are of an age and stage of life that they cannot out-wait the next decade of turnaround in order to regain the losses of a portfolio that is not specifically designed for the upcoming recessionary period.

 

LESSONS LEARNED FROM 2007 – AND WHAT THAT CAN MEAN FOR YOU NOW:


In my many years as a financial advisor, I and my investment clients have experienced a lot together!


In 2007, just before the crash and while most money managers and their client portfolios remained inert, we moved primarily to cash – thus saving many of my clients their retirement (and in some cases even their homes) during banking crisis and Great Recession of that time (and for which many people in our country have still not recovered).


Currently we are facing a similar (and in many ways a more unstable) financial scenario than in 2007.

*PLEASE: I’m really trying NOT to delve into the models, statistics, professional babble and graphic overlays to over demonstrate these points here… My wife tells me that “my Poindexter ways” leave most people glazed over in cross-eyed "zzzzzz-ing off" analysis paralysis.  So I shall save all the savory models and deep explanation of trends for those who must bear with me as my client and partner in managing their futures.

But let me say this much: As a seasoned investment managment firm (and distinquished as a Registered Investment Advisory)  we've been at this work, followed the research, been through the up's and down's many times - and there is an affirmative and effective pathway through the morass of worry and market uncertainty. 

 

Ever since the 2007 recession, I began working on a multivariate life-modeling system for my clients in order to help successfully chart them through market fluctuations and corrections.


  • While nothing is certain in the market and no-one has clear sight until it’s hindsight, we have created a tracking model that is applied individual-by-individual, to assess and map a set of multiple market scenarios - one that plugs in a client's real assets with age/stage of life into a graphic overview of specific positioning options and outcomes.


  • This client-specific model is then tracked and adjusted as often as their life changes, and unexpected circumstances and market conditions collide. In other words, we have designed an ongoing personalized Financial Navigation System for each of our clients (a kind of "financial tracking of your financial journey to your goals/destination).



Then we weave this personal life model into a unique tri-investment strategy: One appropriately positioned for continuing market growth opportunities, along side current and anticipated market loss opportunities, as well as situation-dependent and triggered cash holds. 


This key difference is why I stay heartfully willing to do this business. It has enabled us to navigate the turbulent seas with much more flexible security and clear sighting toward reaching the living goals and retirement shores of our people. 

I can tell you this:

It is a sacred trust to hold someone’s future in your care.



Too many people are not on top of their money manager’s and are lumped into a “one size fits all” portfolio.  This leaves way too much room for missing the mark and remaining stranded on the high seas of a crash that will become a tsunami for some.


OK: I’ve laid the ground work, so now I’ll address more specifically what you can (and should) do to protect your financial future.

 
First Take Away: 
A completely personalized, closely watched, and organically responsive money management relationship with your adviser is essential to these times. 
 

THE KEY ISSUES FROM THIS VANTAGE:

In the people we meet, and who come asking for a second opinion financial review, it is shockingly common to learn that:


  • Most do not have an effectively personalized and informed relationship with their money manager. …And most don’t even realize what’s missing – nor it’s soft and hard costs!


  • Most have remained uninvolved in their own money management – taking a rather “keep my head down and let my broker/banker/financial advisor handle it” approach.

  • And what’s worse (to our trained eye): of those we talk to: most have been left unquestioning with a portfolio that is ill-prepared for a correction.


  • Recessionary positioning in today’s market is absolutely crucial to responsible money management – especially if you are over 55!  (…If you’re over 55 you don’t have the rebound “wait it out” time of a 30 year old.)



 

Without meaning to harp: 

This is a critical time for those seeking to secure a financial future.

 

QUICK SUMMARY:


Right now we have entered a phase that is signaling a coming recessionary correction – one made more unstable and erratic by the socio-political divisiveness in this country and it’s growing global impact on an interdependent world market.


Add to this, a leadership in confused disarray and escalating organizational dysfunction – and we’ve got a pretty perfect storm brewing (…And I’m known as an ever optimist!)

 

SO WHAT CAN YOU AND I DO TO BEST PROTECT OUR FINANCIAL FUTURES?

If you are in any of these key 3 positions:


  • If you are wondering how to weather – and maybe profit – from the long past due recessionary correction;


  • If you are using your investments for cash flow right now, or anticipate needing those funds within the next 3-4 years;


  • Or if you are 50 plus and not sure you have enough to retire on – or are concerned that the recession will postpone your ability to retire or make it impossible to stay retired if you already are (All very real possibilities!)



… I recommend taking these next proactive steps (and ASAP) 


  1. Review and Update your financial plan and portfolio. SERIOUSLY. DO IT. (Many we talk to have to first find and then dust off their old plan, that’s how unrelated it has become!)

  2. Next (and this is crucial): Review your portfolio against your updated plan and in light of your current affairs, retirement needs, goals, and several recessionary scenario spreadsheet models that are based to your age and stage in life as well as your living needs.

  3. Test your financial advisor. Ask to see their plan FOR YOU and YOUR MONEY under 3-5 recessionary scenario spreadsheet models that are specific to your age, stage in life, current affairs, needs and goals for life – and inputting your real dollar income-expenses-investment yields.  YOU NEED TO KNOW IF HE/SHE IS REALLY UP TO SPEED ON YOU!

  4. Get a second opinion / Life Situational & Financial Portfolio Review. It never ever hurts to get a second opinion review: People get second opinions on their health and even what furniture to buy or food to order at a restaurant for goodness sake! Why do we so ignore the one asset that is meant to serve, fund, support and empower our life dreams and secure our wellbeing? NOTE: A second opinion needs to take into consideration far more than a cursory look and a nod that you are invested just like everyone else. If that’s all you get, look elsewhere.*


*You should expect to be asked about your dreams, your goals, your income/expenses, your retirement needs, your health and life insurance integration – the “whole you” package that goes into creating a properly positioned and protected portfolio – especially in these times of impending volatility and movement toward inevitable correction! 


Only you can oversee that your future is protected.



5. Take stock in your life goals and priorities.  In times of market change and personal crossroads it is always a good idea to stop and introspect on what truly most matters in life: where you are headed; what roadblocks exist; what incidentals you might need to plan for; and where you place your wisest next steps toward living the life you seek and the values you hold most dear? 


...IF YOU DON’T DO THIS FOR YOURSELF, YOU CAN’T EXPECT YOUR MONEY MANAGER TO BE ARMED AND EFFECTIVE IN SERVICE TO YOUR LIFE.



6. Reach out. If you are considering retirement in the next 10 years or are already retired; if you are ready to take back the control of your money, your investment strategy and life goals; and if you are willing to consider a new personal relationship with a life financial advisor, then I welcome your call or email to request a conversation and portfolio review… 


For those seeking a proactive stance in life, there’s is no more important time to do so than now…

“Life is inherently risky. There is only one big risk you should avoid at all costs, and that is the risk of doing nothing.” – Denis Waitley
 

Copyright: Clements Investment Management, Inc. April 2018/ 2024 Update

Comentários


Os comentários foram desativados.
bottom of page