Penn Wealth Publishing

2018.11.18 Penn Wealth Report Vol 6 Issue 05

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8 PeNN Wealth Report volume 6 issue 05 18 Nov 2018 Penn Wealth Report Copyright 2018. All Rights Reserved. investment intelligence You vaguely remember Black Monday back in 1987. You more vividly remember the dot-com tech bubble burst of 2000/2001. You were invested during the Great Recession of 2008/2009 and took a pounding. It took some time after these events for you to feel com- fortable with the markets once again, but you were lured back in after seeing companies like Amazon AMZN , Apple AAPL , Netflix NFLX , and Alphabet GOOGL hit new highs on a seemingly-daily basis. Just when you have all of your money working in a nice basket of stocks and funds...BAM! Another correction. I worked intimately with an old-school broker during the dot-com burst. We were based out of a major brokerage firm in the Midwest; a firm which traced its roots back to Abraham Lincoln's Assistant Secretary of the US Treasury—who happened to be the company's founder. e old-school broker was a lot older than I was and, after decades in the business, managed a much bigger book of business. As luck would have it, he was planning his retirement right as the tech bubble was hitting its crescendo. As his clients' equity positions came tumbling down, I remember what he would tell them: "Well, time to scoop up some more!" After all, if a stock he recommended at $10 per share was good, at $5 per share it must be great, right? Not exactly. I was in no position to lecture him on throwing good money after bad, but more that once I walked in his office to find him slumped down in his chair, hands over his face. Ultimately, he extended his retirement plans out into late 2002 to "ride out" the downturn. As soon as he left, the great come- back began. is is a fantastic lesson for every investor. Here was a man with decades of experience under his belt, who managed millions upon millions of dollars for hundreds of clients, and he was still caught utterly by surprise. We began to buy into the "New Economy" gobbledygook and the notion that this giant wave of Baby Boomers was entering their golden spending years. I recall one "expert" telling us that we wouldn't see another big correction until 2030! e past does not equal the future. Quoting stock market adages and paradigms is a pre- requisite once you pass your Series 7 General Securities Exam and become a broker. And the more years under your belt, the more these old saws become ingrained. From "sell in May and go away..." to "buy the rumor and sell the news," it is almost a given that, once a pat- tern seems to emerge, it will follow the same tracks as it did before. at is a dangerous assumption. So much of what the "experts" on the financial news networks have espoused has just been downright wrong. Want a great example? How about the virtual assurance that the markets would tank if a certain can- didate won the White House in 2016? As a financial news junkie, and someone who is tuned into some form of business news ten to twelve hours per market day, I know this to be the case, because I witness it on a weekly basis! If I could impart one piece of wisdom on the view- ers and readers of the financial news networks and publications, it would be this: the past does not equal the future. No matter what happened last May through October, a million global, geopolitical, domestic, and economic data points are not going to align the same way that they did last time around. Basic guidelines are great, but investors must constantly be reading the tea leaves to identify the little ripples that eventually develop into a tsunami. So when we see something disconcerting heading our way, what are we supposed to do about it? Without a doubt, the most critical step in making sure your portfolio is not swept out to sea with the next tidal wave is to understand your unique risk tol- erance level, and make absolutely sure your portfolio is aligned to that horizon. To make sure everyone has access to their personalized number, we make the risk tolerance questionnaire free and available to all on our site. Of course, this questionnaire cannot uncover, in five minutes, all of the particular circumstances in one's life, so you should always consult with a financial professional at this point. Once you are comfortable You worked too hard building your portfolio to let it wither away due to forces outside of your control Portfolio Protection Strategies Tactical Stop-Losses e content of this report reflects the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guar- antees can be made and the firm is not liable for any losses incurred by subscrib- ers. is is not a solicitation to buy. Always consult your investment professional before investing any money.

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