There was a time in this country when savvy investors made fortunes on radio stocks. After World War II, massive government spending launched unprecedented economic development worldwide.In 1965, Lyndon Johnson signed the bill establishing Medical Care for the Aged, forever changing the health care industry in the United States.
Markets evolve.Polaroid and Kodak, the picture companies, thrived for decades before falling prey to the digital revolution. To look at investing only through the lens of your monthly statement is to miss the grand sweep of history which, like the tides, will reshape the landscape over time. Likewise, to shape your investment strategy looking at the past is flawed. Only one of the original twelve companies in the Dow Jones Industrial Average still has the same name:General Electric. The other eleven companies have been sold, renamed, liquidated, or otherwise become something else since 1885.
At a recent investment conference, the opinion among economists that spoke was consistent. They believe volatility is here to stay. The markets are evolving.
Investing by definition must be a forward looking endeavor. Profits earned in the past are good, but past. The forces shaping the global economy in this second decade of the 21st century are new, and that is nothing new. Developed economies are sluggish.Emerging markets are heating up. Trade relationships are shifting and technologies are driving decisions at light speed. Volatility that only a few years ago caused white knuckle reaction is now commonplace.
Many investors are finding solace in a team approach to investing. Technology has made access to some of the best minds in the marketplace affordable to the masses. Platforms provide specialists in diverse markets that once worked exclusively for the wealthy. As the baby boomer cohort moves into their elder years, this development could not come at a better time.
The challenge for all investors is to balance the tradeoff between risk and reward. Traditionally that meant seasoning a portfolio with a helping of fixed income, or bonds, to offset the volatility of stocks.
Today we are learning that volatility is not exclusive to stocks. In fact countries and companies are renegotiating debt obligations and default is a word that is in the air. The holders of General Motors debt, Greek debt and Harrisburg, PA debt could instruct us about the safety of bonds or lack thereof.
Research is a premium component of a successful investment venture. There is more information available to more people than at any time in history. Having information and knowing what to do with it is as much art as science. That is the value of building a team. Your fixed income experts should be different than your equity team. Developed countries will have specialists that are not expert on emerging markets. Legions of knowledgeable, capable professionals are eager to serve your interests in managing and preserving your capital.
Building your team is a focus that is in itself a specialty. No primary care physician will offer her services for neurology or surgery, nor should she. She will know which specialists are best for her patients.
Such is the role of the wealth manager. We identify which specialist is right for each client in order to achieve their mission, vision, values and goals. We implement the strategies that convert resources into realities. No one person has all the answers.In teamwork we find the potential for winning.
We are grateful for the opportunity to serve you in your planning adventure. Please call us to discuss any concerns you have. If you hear of someone in need of help, please don’t keep us a secret.
View the rest of our Summer Newsletter here.
Newsletter prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012.