FREE FALLING MARKETS AND THE MADNESS OF CROWDS
As we watch U.S. and global markets free fall, it provides an excellent opportunity to consider the impact of uncertainty on investors. In effect, we have seen a perfect storm. While the prospect of large institutions such as Merrill Lynch, Lehman Brothers and AIG being humbled is difficult enough to fathom, watching Bernanke and Paulsen go from bravado to hesitancy is downright frightening! After a couple of weeks when the curtain was pulled back exposing the nakedness of the titans of finance, how are average investors supposed to react when faced with the challenge of sorting out this mess?
Clearly the market is now in a sorting phase. The musical chairs game the derivatives market has been playing for the last seven years is apparent. Now that the music has stopped, we will find out who is without a seat.
As all of you know, our investment approach has always embodied a combination of healthy skepticism, caution and common sense. We buttress this with a safe timeline which allows us to avoid getting caught up in the short-term hysteria of the market. Our five year forward-look approach was designed to protect us from just this type of environment.
We have no doubt things will settle down and those who have been investors, as opposed to speculators, will realize reasonable returns on their investments. Like most crisis, there will undoubtedly be lessons learned here which will soon be forgotten in the next “wave of opportunity”. Through it all, we will continue to advise you in a manner which is designed to preserve your wealth and provide a reasonable return.
As always, we are here to provide sound advice and access to timely information to assist you in achieving your financial goals.
Please do not hesitate to call us with any questions.
Best regards,
tim