It has been 10 years since the depths of the financial crisis were upon us and nearly every day brought more bad news. Lehman Brothers failed, car companies were going bankrupt, the world’s largest insurance company, AIG, was on the brink of failure, plus many other banks and financial institutions. Bailouts, unheard of monetary policies and other central bank interventions around the world were being introduced like never before. Looking back brings me great anxiety. It was the most difficult period I have experienced in the past 31 years. It surpasses the market crash of 1987, the dot-com bubble burst in 2000 and the impact of 9/11. Our financial system as we know it was about to crumble.
What lessons were learned? For individuals, companies and countries, the memories are still somewhat fresh in our minds, even ten years later. What if it happens again? The debate will probably go on forever, but in my opinion, the leadership skills of some very smart people saved our financial system from peril. Was it done perfectly? Absolutely not. Millions of people lost their jobs, homes and livelihood. As a firm, we try to follow the motto of a quote from Albert Einstein. “If you can’t explain it simply, you don’t understand it well enough.” Perhaps, in my opinion, the cause could be summarized by the following: excessive debt, poorly created financial products, greed and stupidity. Sounds a little bit like today but isn’t it true that these issues have been around for a very long time!
As investors, the question for today is relatively the same. The lesson learned for those of us who experienced a 20% decline (and more), what did you do?
- Sold everything
- Sold some
- Did nothing
- Reallocated my investments
- Bought more
The Dow Jones Industrial Average hit a new all-time high of 14,164 on October 9, 2007. By March 9, 2009, it dropped to 6,547! It took until February 2013 to return to the 14,000 level. Recently, we hit new all-time highs! Depending on how you answered the question and responded, your investment experience was greatly impacted in a substantial way.
What do we do now? A question I receive all the time and much more frequently as of late. Interest rates are rising, yield curves are flat, trade wars and tariffs are in the headlines nearly every day, we have mid-term elections coming soon. When you throw in endless political banter, it is shocking we can even get out of bed some days. It has happened before, and it will happen again. The economy and markets move. Period. Up and down, but mostly up over longer periods of time. Our optimism persists! We believe in the capital markets and as I have said in the past, “as long as money has importance on this planet…I’m in.” Everyone must have their own priorities and we know you have you own unique perspectives and views. We can’t and won’t attempt to time the markets. Our commitment is to always place first the interests of our clients.
Please know we always want to hear from you, especially if you have concerns or comments about your own circumstances. It is never easy navigating the complicated world of investing and how it impacts you personally. We are honored that you have placed your trust in us to assist with your investment and wealth management needs.
The material in this publication is based on data sources we consider to be reliable, but it is not guaranteed as to accuracy and does not purport to be complete. The interpretation and organization of these ideas are the views of Kevin Welu and do not represent the opinions of TrueNorth Wealth Management. This information is not intended to be used as the primary basis of investment decisions nor because of particular individual client requirements, should it be construed as advice designed to meet the investment needs of one investor.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and TrueNorth Wealth Management are separate entities from LPL Financial.
The economic forecasts set forth in the presentation may not develop as predicted. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. No strategy assures success or protects against loss.
The Dow Jones Industrial Average Index is comprised of U.S.-listed stocks of companies that produce other (non-transportation and non-utility) goods and services.
The Dow Jones Global ex-U.S. includes equity securities with readily available prices that trade globally, excluding the U.S. The index is a subset of the Dow Jones Global Total Stock Market Index.
Lipper indexes are based on the 30 largest funds by asset size within the Lipper objective and do not include multiple share classes of similar funds.