This Time, Is It Different?
According to Reuters, The Dow Jones Industrial Average has lost 12% since hitting a record close on Feb. 19, 2020, marking its fastest correction ever in just six trading days. During these six days, I have never felt so right, yet been so wrong. While we do not subscribe to the ‘this time, it’s different’ mentality, The Gardner Group wants to remind everyone of two key issues.
First and foremost, in over 30 years of helping clients with their financial planning, every major correction and bear market The Gardner Group has gotten clients through has been a drastic change in demand. The consumer’s desire (or ability) to keep spending diminished. This includes the fear of Y2K, the attacks of 9-11, and the chaos of the Financial Crisis. As of Friday, this sell-off is (probably) a reflection of fear from the unknown Coronavirus, and that is primarily supply shortage. The ability for retailers, suppliers, and service providers to deliver their products to consumers for purchasing. And needless to say, we continue to review all available information on this; in particular any impacts on your financial plan.
More importantly, in the 4th quarter of 2019, we began to implement new technology to better quantify risk in your portfolios. We wanted to easily articulate the potential downside risk of 6 months of bad news to your portfolio.
This new risk alignment platform mathematically pinpoints how much risk investors want, how much risk you currently have in your portfolio, and how much risk you need to take to reach your goals.
Our goal is to better quantify the semantics of the financial advice industry, replacing confusing and subjective terms like“moderately conservative” and “moderately aggressive” with the Risk Number®, a number between 1 and 99 that pinpoints your exact comfort zone for downside risk and potential upside gain with a 95% Probability Range.
Successful long-term financial outcomes are built by our clients making one good short term decision at a time, and that only happens when we better equip you to do so.
The Gardner Group has been implementing this stress-testing since the end of 2019. Our plan was to confirm and share these numbers with you as we updated your Investment Policy Statement throughout 2020. However, we realize this health scare and current sell-off has all of us concerned. If you want to see your report, please let us know, and we will get it to you ASAP.