Investment Planning

A high-profile internet celebrity is leading a legion of day-traders with his antics.

Growing up in Southern California, fruit trees were everywhere. It seemed like orange, lemon, and avocado trees were on every corner. My backyard had two huge trees – one orange and one lemon that repeatedly produced fruit. My grandfather owned a citrus ranch with thousands of trees.

Jerry Sloan, the legendary coach of the Utah Jazz, recently passed away. Mr. Sloan had a stellar career as a player and a coach. As a player, he was twice an all-star, and his number was retired by the Chicago Bulls.  In 2009, he was enshrined in the NBA hall of fame for his coaching ability.

After the Great Recession, a friend asked me if diversification still made sense. He followed up with another question before I could answer. He asked, “If my assets are diversified, how come I’m losing money?” I said diversification still works, but it doesn’t protect you against a loss. Diversification helps reduce your risk allowing you to create generational wealth.

Cash is wonderful. Simple. Humble. It never boasts when times are good, nor complains when times are tough. Cash is an asset like stocks or bonds or real estate, but it doesn’t get any respect – like Rodney Dangerfield, but it should, particularly when the stock market and economy are struggling.

My Grandma B was born in 1900. In Iowa. She dressed to the nines and did not appear to have a care in the world. She loved playing the piano, singing songs, and visiting with her family. Her sources of income were modest, relying on Social Security and rental income from a building that housed a florist. Despite her small income, she never appeared to want for anything.

Global stock markets are selling off, oil is crashing, and the Coronavirus is spreading. Year-to-date, the Dow Jones is down about 15%, and things can get worse before they get better.

The Dow Jones is down 18.8% for the year, so is it too late to sell?

The Dow Jones Industrial Average continues to ascend to new heights.  The higher the market climbs, the more noise you’ll hear about a stock market correction.  At some point, those calling for a market correction will be right.  Stock market corrections are typical and occur about every three to five years.   A bear (down) market will last approximately 18 months while a bull (up) market will run for about eight years.

Interest rates continue to fall. U.S. Treasury investments with maturities from one month to thirty years are now yielding below 2% as investors pursue safety. The Coronavirus is generating global economic uncertainty, and our government bonds are benefiting.