Should You Pull Out of the Market? Maybe, Maybe Not.
If you don’t have an inbox full of emails from financial institutions warning you not to pull out of the market, we want to learn more about how you set up your email spam filters. In all seriousness, though, this advice is well-intentioned and it’s responsible guidance – some of the time. The problem with blanket statements like this is that they present a false choice; investment strategy is far more nuanced than whether you are in or out of the market. There are times when staying in the market, or in a particular sector, is unwise and, when you hear that it’s time to get out from your Uber driver, it’s likely too late for damage control. That said, peaks and valleys are the very nature of the stock market and your financial strategy should have planning for weathering financial storms embedded into it, as providing reasoned, rational guidance to clients through financial downturns is part of what an Ultra-High Net Worth wealth manager should do. So, when it comes to deciding to gut it out during uncertain financial times, here’s what you need to know.
3 Question To Ask Yourself When Considering Getting Out of the Market
If you’re feeling anxious about your financial future and considering whether you want to cash out of the market, here are the top considerations you should keep in mind before taking action.
1. Are You Reacting Out of Emotion?
Your investment strategy should never be “on or off.” Here’s why: you can be a successful, seasoned investor with Chris Weber’s penchant for academic research and, if you’re reacting emotionally, you’ll miss out on critical days in the market that leave you on the sidelines. To paint a picture of how bad that can be from the perspective of retirement planning: missing the best 10 days in the market over a 20 year timespan cuts your overall returns in half.
Whether it’s tech or digital currency, when you spend as much time as we do studying the hot trends in the market and analyzing sectors no one else cares about, you start to get a gut feeling for what’s coming. While no one can see into the future, we’re confident in our skills and experience to determine when it’s time to cool off in a particular sector or investment in favor of another, or perhaps settling some cash for a strategic period of time. Liquidity or precious metals are a strategy – they’re not an escape hatch. Reacting to real information, following reasoned guidance and staying informed is good. Reacting emotionally because you’re trying to control what you can in a time where you feel out of control — that you want to avoid.
At Weber Global Management, we take time to understand our clients’ tolerance for risk and their comprehensive financial picture to help customize an optimized strategy for their unique situation.
2. Are You In A Rush?
What’s driving your decision of whether to stay or go? Is it fear? Is it advice from an investing blog or a friend-of-a-friend? Consider the source, consider what’s motivating your behavior. It’s understandable to feel emotions about your financial future, especially given our current circumstances, but reacting impulsively to those emotions in an attempt to quell your anxiety is not a sound financial strategy. Instead, take those concerns to your wealth management advisors, who can provide you with guidance that is certain to be more layered and nuanced than whether to stay in or cash out.
You may not be comfortable with the discomfort of financial storms and you shouldn’t have to be. That’s why we’re here.
3. Are You Following The Crowd?
We’ve said it before and we’ll say it again: don’t let the crowd make your decisions. We’ve made many clients incredibly wealthy off of unsexy, unpopular sectors and by having the patience to wait out trend reversals. When the rest of the world is saying an investment is “bad,” it’s often a sign to us that the trend may be reversing and now is an opportunity to get in at a lower cost before the masses do and enjoy the ride back up. That said, sometimes it’s okay to be with the crowd — just don’t follow them off the proverbial cliff.
In Good Times and Bad, The Right Guidance Is Critical
Weber Global Management is helmed by industry veterans, Chris Weber and Briton Hill, whose combined skills and expertise provide reasoned, educated investment strategies for Ultra-High Net Worth clients. From thorough analysis to forecasting, Weber Global Management provides sound financial planning based on a holistic understanding of a clients’ current portfolio and future goals and employs clear communication to ensure their clients feel secure and confident in retaining and maximizing their wealth.