A real tearjerker - but not the kind you're used to...


Some of Hollywood’s best movies have been tearjerkers.

An Officer and a Gentleman comes to mind. And Beaches with Better Midler. Oh boy; that was a tough one. Even Jerry McGuire (You had me at Hello!) Great movies - all of them.

Sometimes a tearjerker comes in written form like the book I picked up at Barnes & Noble recently. The book: Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown is sad all right.

I'll summarize: The financial world is going to end as you know it and you had better cover yourself in gold in a bunker somewhere. I wanted to cry...

Aftershock was quite alarming, to be sure. I know it’s tempting to file the doomsayers far, far away but there are always a few nuggets we can glean from how others view the financial markets. The objective being to protect our investments and retirement plans.

Clearly, when it comes to investing for retirement, the best advice is often NOT to focus on the day-to-day blips of the market. U.S. savers, however, (according to US News) have taken that idea a bit to far.

"Instead of avoiding daily monitoring of plans, many Americans are ignoring their savings – or don't even have a strategy. According to a recent survey from Voya Financial, 80 percent of those with retirement plans have avoided reviewing or making any changes over the past year. That's compared to 43 percent of the respondents making changes to a phone, cable or internet plan."

So my goal is not to produce tears (or to turn you into a day trader who obsesses over the market’s every up and down), but, rather, to shed some perspective on where we are at the beginning of 2017. As I’ve shared with you in the past, one of the principle secrets to successful investing is minimizing (or managing) how far down your portfolio goes when markets correct. (See: Minimizing the Max Drawdown.)

Warren Buffet’s main rule for investors, as you know, is - Don’t lose money. We know that’s not always possible but there are distinctive times in history that serve as a precursor to lower returns in the immediate future. This may be one of those times.

The chart below shows maximum 3-yr drawdowns per quintile of equity pricing.

Today we are in the most expensive quartile. (The column all the way to the right.). Historically speaking (if the last 76 years are any indication), we are ripe for a correction. (NOTE: the short term trends are still bullish. It might not happen immediately; however, it will at some point. Always does.) (Read: Why I’m taking chips off the table.)

And the point I make to my clients over and over again is that there is simply more risk when prices are higher than when they are lower. You can see that the biggest drawdowns (over a 3 year period occurred when prices were at similar levels as today. So save the tears, but be aware.)

And I don’t know about you, but for once in my life I’d like to have a pile of cash to purchase equities (Stocks of solid companies) when prices are in the bargain bin, as opposed to where they are now. At that fancy boutique down the street where you know it’s best to not even browse.

That’s just the way it works!

Required disclosures: Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and (Strataxa Retirement Advisors, LLC) are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.

Information provided is not intended as tax or legal advice, and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional.


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Darryl Rosen MBA, RICP

Darryl Rosen is the founder of Rose Advisory Group, and operates www.RealRetirementAdvice.com as a way to help others create their ideal retirement. He is obsessed with helping people create safety, simplicity and strength in their financial future. Darryl’s clients enjoy his straight-forward, plain-spoken guidance, strategies to minimize taxes and ability to generate investment returns, while minimizing risk so his clients can sleep at night! Darryl is licensed to provide guidance on securities and insurance solutions and has achieved the highly desired Retirement Income Certified Professional (RICP) designation.

Darryl is the creator of the well-known SECURiMENT™ Retirement Planning Method. A simple to understand and implement planning method that demystifies retirement planning so that people can take action. Visit Rose Advisory Group to learn more! 

Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor.  BCM and (Rose Advisory Group) are independent of each other.   Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Information provided is not intended as tax or legal advice, and should not be relied on as such.  You are encouraged to seek tax or legal advice from an independent professional.