Proactively Patient in Today’s Markets
It seems every day we continue to see negative news in the markets, and the knee-jerk reaction is to do something, anything. Let me take a few short minutes to tell you some easy things to consider when we’re in for a bumpy ride ahead. Hello again, Dave Duley is here with Georgia Advisor Group, a 40-year fiduciary firm here in Alpharetta, GA.
I coached football for over 26 years as an advisor, and now I stress to the players to be patient as the game unfolds. We often get anxious and panicked when things aren’t going our way, and we want to either go deep into the playbook and try some crazy things, or we want to figure when we can just stay the course and things will work out.
Now many times we have to call a time out. We have to reevaluate and set some new action items. Now patience doesn’t mean we do nothing or stick our head in the sand. I hear a lot today that many people are just saying, “I don’t even want to look at my accounts today.” This is absolutely the wrong approach to take. Being proactively patient means now is the time to reevaluate my positions. Six months ago, we moved our clients’ portfolios to a 50 to 60 percent cash position, the first time in 40 years, knowing that with 20 percent inflation, that’s not where we ultimately wanted to be, but we called the time out. Second, we wanted to be able to take advantage of lower prices in the future; we’re not going to try to guess bottoms, but we’re going to make a plan to cover resources available to buy great companies at lower prices that we believe have been beaten up to the extreme.
We’ve always taken the stance to protect our portfolios with options trading, which means we’d place put options below our purchase price to protect them from fast-moving equity markets. market swings and locking in gains as the markets moved up, but because the markets had moved to a snail’s pace and a downward trend since last November, the cost to do that became prohibitive, so we moved to a partial cast position in our portfolios where we could close positions considering the best tax advantages and then we would have dry powder cash to purchase great companies at a discount in the future. It’s no different with repositioning. The steps you can take today are to see where you can take some long-term gains from positions that you don’t believe will bounce back as quickly as some others.
When I see a company that has all the fundamentals in place, tonnes of cash on hand, great margins, Companies that have great management in place but have been beaten down because they are so widely held these are the companies I want to own and be in for the long haul well into the future now do I want to buy them today maybe not but I may want to set up a plan to buy some shares each month over the next six months as the market continues to drop I want a dollar cost averaging in while the market is falling I’ve got homeowners insurance, right? I’ve got life insurance. Why in the world would I not have protection on my portfolio? So protective patience means slowing down, reevaluating, and putting together a new plan. All that said, you need to ask your advisor what steps they’re currently taking and what the new plan is. If this continues over the next two years and you don’t get specific answers, then you need to run.
Don’t bury your head or get anxious, but I can assure you that one of the things that hope is not a plan is I’d love to hear from you, and so would our viewers, so comment below and let us know what action you’re currently taking, but click subscribe below and ring the bell this way I can continue to keep you informed on great ideas to manage through this mess if you need a reevaluation or just a set of fresh eyes on your portfolio, go to our website where there’s great content, fill out the form, and we’ll help you get you on the road ahead until next time