Pandemics, Portfolios and What’s Next

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What a year it has been! I have a new appreciation and definition of an essential worker. If not for grocery store stockers, cashiers, delivery drivers and medical personnel, etc., the rest of us wouldn’t have been able to work from home or “stay home”. Now that vaccines are becoming more widely available, people like the spring flowers are beginning to pop out everywhere. My hope is that we will remember to be kind to each other. The past year has certainly shown us all that we crave human connection; the in person, face-to-face kind that involves hugs and high fives and lots less screen time.

In February and March of 2020, the equity markets were in full retreat. Panic was setting in and my phone and email were blowing up with questions about “whether we should just sell everything and wait until things are better.” Sit with that thought for a minute. If you sell when things are down, when will you get back in? We actually saw the equity markets begin to move up long before the virus numbers started to retreat. Even when the virus numbers were hitting there peak and widespread, effective vaccines were still a hope and prayer, equity markets marched upward.

That’s the thing about markets, they’re a leading indicator. In March of 2009 when the recession hadn’t come close to ending for most people, the market hit bottom and began a decade long climb upward. To successfully time the market requires that you not only know when to get out of the market, you also know when to get back in. Getting the timing of both of these decisions correct is all but impossible. I believe this is why average investor’s returns trail the returns of the average mutual fund by such a large degree. Stocks are the only asset we want to pay full price for. We will so eagerly buy other products when they are on sale, but most people are not as eager to buy stocks when they’ve fallen by 20% or more! Of course, some companies will fail and their stock will become worthless. That’s why we advocate against having more than 10% (preferably less than 5%) of your portfolio concentrated in just one or two stocks. That means even stocks that are well known and comfortable. For example, GE was once the darling of stock investors but it has struggled mightily in past years.

The question we are asked the most these days is “how much longer can this stock market rally last.” The honest answer is that we don’t know. We do know with a fair amount of certainty that stocks will pull back at some point and it’s likely that they will not recover nearly as quickly as they did in 2020. This doesn’t mean that you should stay away from stocks. With US Treasury bond yields still firmly below 3% and CD’s and money market accounts below 1%, you will likely need the return potential of stocks to meet  your retirement and other financial goals. Over decades stocks have outperformed bonds and cash by a good margin. In any particular day, month or year, it is anyone’s guess. Having the ability to stay the course is the best barometer of a successful investor.

I will leave you with this example. We work with a large manufacturer and advise their employees on 401k allocations and other financial planning topics. In the last 5 years, we have counseled over 1000 teammates. With maybe one or two exceptions, the teammates who have experienced the best returns over time in their 401k are those that come in and say some version of the following, “I don’t really have a philosophy. I just contribute as much as possible and don’t look at my account when I hear the markets are down. I have not changed anything in years.” When thinking about your money, think it of it like a bar of soap. You certainly need it to keep clean but if you leave it in the bottom of the shower, it’s going to mostly wash down the drain. Your money is like that too. If you’re constantly changing your investments around, it’s likely that you are going to see a lot of it waste away by trying to chase the next hot stock or prevent a loss. Have 3-6 months in cash, more if you’re retired or just nervous in general, and then let your investments work for you.

All the time you save by not stressing over your portfolio can be better spent catching up with friends and family this spring and summer! I know I’ve missed all the casual get togethers and dinners with friends.

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Our approach is to discover a client’s goals, determine the personal financial plan that is needed, and aid the client in reaching those goals. Our success is measured by how well our clients achieve their goals.
Hank has had a distinguished career in the financial services industry, including more than 40 years in the financial planning and securities fields. From 1985 to 2013, Hank provided fee-only financial planning services through his firm, Lifetime Planning, Inc. Hank merged his practice with Stacey’s in 2014. In addition, Hank is a member of both the local and the national chapters of the Financial Planning Association (FPA).
Hank received his bachelor’s degree in business administration from the University of Mississippi, where he also lettered in football. He received his initial securities training at Merrill Lynch. He was a financial planning consultant for the Memphis office of Ernst & Young and financial planner at Morgan Keegan & Company, Inc. from 1982 through 1984. In April 1984, Hank completed his CERTIFIED FINANCIAL PLANNER™ professional requirements with the College for Financial Planning in Denver, Colorado.
In addition to his financial planning practice, Hank has enjoyed serving on the boards of Presbyterian Day School, Second Presbyterian Church, University of Mississippi, and the Christian Community Foundation. Hank served as the chief financial officer of the Christian Community Foundation from its inception in October 1998 until October 2000. Hank enjoys reading, hunting, and attending baseball and college football games.
Clay serves Envision Financial Planning’s clients as the investment officer and portfolio manager. His duties include overseeing the firm’s investment process and money management strategies with a strong focus on “goals-based” investment planning.
As a firm, we believe in concentrating on things we can control such as:
Clay is a native Memphian and a graduate of the University of Mississippi. He began his career working for a regional broker/dealer specializing in fixed-income securities, and prior to joining Envision, Clay was an investment research analyst and portfolio manager for a private wealth management firm in Memphis. Clay currently holds his FINRA Series 66 securities registration and obtained his CERTIFIED FINANCIAL PLANNER™ designation in 2021.
In his free time, Clay enjoys playing golf, exercising, reading, and cooking with friends and family. He and his wife, Margot, have two boys named Callan and Wiley.