This time last year, we were headed into a bumpy holiday season with the S&P 500 down more than 20 percent on Christmas Eve during intraday trading from its record high. However, Beacon clients who understood and embraced our philosophy were able to sit back and enjoy their year-end festivities knowing the stop-loss had been triggered and that they were safely on the sidelines until volatility settled down.
The pulse of investor sentiment
When the market delivers home runs, it can be easy to get lost in the excitement or to make inaccurate comparisons; however, tuning out the noise, remaining connected with our mission and aligned with your investors’ true needs is the only important bottom line to remember.
In traveling and speaking with many of these investors in recent weeks, we have heard an overwhelming appreciation for exactly what the Vantage portfolios were designed to deliver—more consistent returns. One couple shared that if they had made 30% this year, their lives really would not have changed at all, other than maybe leaving a bit more to their families at the end of their lives. They would still take the same amount of income each month and do the same things they do every day. But if they lost 30%—that would drastically change their lives. That would result in downsizing daily living standards, skipping bucket list dreams or even going back to work—a meaningless gamble they had no desire to make. Even those who aren’t yet retired have expressed how they have worked hard for what they have accumulated, sharing the sentiment that they would much prefer consistency to the chance of suffering the loss of their savings.
What could derail this aging bull market?
By any metric, valuations are high in the market today, and we have to expect that we are closer to the end of this run than we are to its beginning. At this stage, any headline big or small related to trade deals is making short-term waves in the market, both good and bad.
However, it’s the news that we can’t see at the surface that causes the real threat. Things like how big the mortgage crisis was behind the scenes before the last bubble popped—that’s what creates a catastrophic impact. Or in looking at the bond market this year—you’d be hard-pressed to find anyone who anticipated the negative interest rates around the world would drive the bond market up as they have. These things go to show that predictions and forecasting are a waste of time. It’s much more important to have a plan in place that aligns with your clients’ needs and prepares for the unplanned. Chances are, they will prefer to enjoy some participation in the market for as long as it continues to perform, but will want to err on the side of being too conservative or defensive than facing a significant loss when that time comes.
Need help sharing the Beacon philosophy with your clients or prospects?
Contact your wholesaler today to learn about all the great resources available to you, or to discuss how they can be of help in reaching and exceeding your business goals going into the New Year.