Why I Hate Mondays

Stress, worry, uncertainty of what’s to come—these emotions describe pretty much any Monday, but this morning, many investors shared in my feeling that Mondays really are the worst.

But if you’ve done your homework and preparation, facing a test on Monday (or any other day) becomes much less nerve-wracking. And as the markets have shown us so far this morning, it might just turn out to not be as awful as you thought it would be.

You have probably heard that last week was one of the worst weeks for the markets in quite some time, with the DJIA losing over 1,000 points. This morning, Dow Futures sold off, leading some to fear even more of a selloff…but as markets opened today, they rebounded significantly, with the Dow recovering more than half the losses experienced at the market open in just one hour of trading. We might not have seen the last of this selloff—but it does go to show that agonizing over the ticker tape can cause a lot of unnecessary stress!

We’ve Done Our Homework

Think of these market twists and turns as a “test” of your preparedness. The good news is that we have been expecting this “test” or correction for some time, and have done our homework: creating diversified portfolios that allow one asset class to “zig” while others “zag.” Market winds change without much notice and the best defense is a well-diversified portfolio built around your specific needs and objectives.

We have been saying for a long time now that markets have been artificially engineered with interest rates near zero and false economic indicators. Eventually, this was bound to play out with prices correcting. The good news is that during this painful selloff in equities around the globe, another asset class—U.S. fixed income markets—are jumping in price as investors flee to safety. We have held a very sound and diversified portfolio of these securities for a while. Their role is essential and we are fortunate to have them as they are our anti-lock brakes, air bags and insurance policies during these difficult times.

Analyze, Don’t Agonize

It is natural to feel stress when the market goes down, particularly since so many investors are gun-shy from the tech bubble bursting in early 2000s and the real estate bubble bursting in 2008-2009. Each time a market selloff presents itself, it’s hard not to wonder if we’re about to feel that pain again. In reality, market selloffs do not usually lead to large dips and instead offer us signals about the adjustment.

In this instance, the indicators point to a global shift occurring. This shift is excellent news as it helps us in the long term. It is looking more and more likely the U.S. will be the market leader for growth over the next five years or longer. China is going through serious trouble and countries around the world need liquidity. This bodes well for our nation, our markets and our currency. It will pay to be an investor in U.S. markets.

As unpleasant as selloffs can be, remember:

Global markets are adjusting to the U.S. likely being the beacon for future global growth.
Interest rate increases may still happen, but they will likely be brief and small based on market prices.
Liquidity is always critical, and the U.S. has the most liquid markets in the world.
Your bonds are rising in price as fear hits equities.
Reserves will be put to better use as market selling hits a capitulation point.
Your portfolio was already well-positioned for this type of adjustment.

What We’re Doing to Protect Your Money

Be confident in your portfolio design, as it is absolutely built for the long-term.

Corrections do not hamper income, as that portion of your portfolio is protected in specific segments. Your income portfolio does not rely on equity prices and reserves are sufficient within the portfolio. Looking for value is something we regularly look to do and for much of the past year or so, we have felt the markets were selling at a premium.

I hope this helps to ease your mind as we all watch this correction unfold. No one likes facing tests on a Monday but with the proper preparation, market corrections result in opportunity!

Be well and feel free to let us know if you have any questions. Despite the market news, enjoy the final days of summer!

Regards,
Ted Halpern

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