Unlocking Real Value Blog

It’s Beginning to Feel a Lot Like …. (October 2008)

I almost entitled this – What Goes Up Must Come Down – in the sense that most market experts have been expecting a correction (as part of a normal bull market). But this doesn’t feel like a correction – this feels like those days back in the Fall of 2008 and the beginning of 2009 when your stomach dropped on a daily basis and +300 point up or down days were not uncommon.

It started this time with Greece …. and the other PIIGS (Portugal, Ireland and Italy) and their debt problems … then add on Goldman Sachs, European indecision on how to handle the debt problems, a falling Euro and the impending passage of the most comprehensive financial reform bill in decades. Oh, sorry – I forgot to mention weaker than expected economic numbers over the past week and that 1000 drop in the dow that still can’t be explained.

Is it any wonder that market participants are nervous? Trust me – talk of a double dip recession is going to come storming back.

I don’t know if in a month from now things will be better or worse – I wish I did. I am not a market forecaster and I gave up my economic research duties a long time ago.

But what I do know is that clients are nervous – and rightfully so. 2009 was a year of recovery in the markets, but even so many investors are not back to where they were pre-Lehman. Very few can be comfortable now thinking that the roller coaster may have started on a large down hill run again. And it won’t be long before the questions about the validity of asset allocation are raised again.

Now is the time for over-communication. Hopefully, those of you that are client-facing have already been proactively calling your clients and keeping them calm. Use whatever information you can from the information that you read to keep them focused on their long-term goals. Make sure that their risk tolerance profiles are up to date. I don’t think you can over-communicate!

This to shall pass. The question is whether it will happen soon, with less pain, or longer-term with more pain. Don’t let that issue get in the way of helping your clients now. They will appreciate it and you regardless of which scenario plays out.

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