Dude, Where's My Car?

Getting a car fixed is not fun.  When my check engine light comes on in my car my blood pressure rises.  A flat tire, a cracked windshield or an engine failure usually require a visit to the automotive shop.

One of my best friends from high school has been fixing cars for as long as I can remember.   His nickname was MacGyver because he could fix anything.   Brian opened Brian Wood Automotive (www.brianwoodauto.com) a number of years ago and has successfully fixed cars for over twenty-two years.  

To my knowledge no one has ever driven their car to Brian’s shop because their car was running well.    People don’t give their cars much thought because they’re expected to perform without incident.   However, when your car goes down it’s nice to know it can be fixed.

The stock market, of course, goes up and down.  Like Brian, I don’t receive calls from clients or investors when things are going well.  When the stock market is up most people don’t call to ask what’s going right.   The stock market is expected to always go up – yes?  When the stock market is “broken” or going down the phone calls go up.  What’s “wrong” with the stock market?  Why is the stock market falling?  

Over the past five years (9/19/11 – 9/19/16) the Standard & Poor’s 500 stock index has increased over 78%.   During this span the S&P 500 has risen 54% of the time and fallen 46% of the time.  The best up day during this stretch was November 30, 2011 when the market rose 4.15%.  The worst day was August 24, 2015 when the market dropped 4.10%. The market had twenty days when it climbed 2% or more and 32 days when it fell 2% or more.   From August 20, 2015 to August 25, 2015 the S&P 500 declined 10.92% to a level of 1,867.61.  However, since the drop in August of 2015 the stock market gained 15% to a current level of 2,148.94.   An investor who sold their holdings during this rout missed the 15% recovery in stock prices.[1]

Brian is a successful business owner because he listens to his client, identifies the problem and fixes the car.  He also encourages his customers to regularly maintain their vehicle to avoid the bigger mechanical issues so they can keep their car on the road for thousands of miles.

What can an investor learn from Brian Wood Automotive?

·         Identify the problem in your portfolio and get it fixed.

·         Review and maintain your portfolio so you can enjoy long-term returns from the stock market.

·         Re-balance your tires and your portfolio

·         A financial plan is your diagnostic road map to keep your portfolio moving forward.

If everyone is moving forward together, then success takes care of itself. ~ Henry Ford.

Bill Parrott is the President and CEO of Parrott Wealth Management, LLC.  www. parrottwealth.com

September 19, 2016

[1] https://finance.yahoo.com/quote/%5EGSPC?p=^GSPC, accessed 9/19/16.

Note: Past performance is not guarantee of future performance.