Nick Foy, CFP®
As fears about the spread of the coronavirus continue to rile markets worldwide, I thought I’d provide another update into how we (and our clients!) are fairing.
First, I’m sure there are some clients who have had sleepless nights over the past couple of weeks, wondering when life will get back to normal. The other day, my wife asked me how I was holding up, and I told her that I’m fine but I’m more concerned for you, our clients.
However, I’m also incredibly grateful. For sure, we’ve fielded some calls and e-mails from clients who have some (valid!) concerns. But for the most part, our clients have been seeking out opportunities to accumulate more stocks at a discounted price.
Our trading systems and processes haven’t yet been stretched like they have for the past two weeks, and I’m glad to say that we’re doing just fine.
Having lived through the market decline in 2008-09 (as an advisor) and through the dot com bubble burst in 2001 (as an investor), and having studied market history and behavior for more than twenty years, I can say that I’m actually enjoying the opportunity to put into practice so much of what I know to be true, and to see the benefits for our clients.
Within the advisor community, we often talk about the relative utility of risk tolerance questionnaires. Those 10-question surveys we give clients in order to judge how much market risk they can stand before a significant market drop is too much for them to take.
I’ve found that those questionnaires have limited benefit, as it’s much easier to judge yourself a risky investor in a vacuum, without dealing with the immediate stress that market madness can create.
One of my favorite authors is William Bernstein, and his book The Four Pillars of Investing is, to me, one of the most important books on personal finance and investing.
Elsewhere, he describes three different types of investors:
We’re at the point where all three are proving necessary. So, which type of investor are you?
If you’re a Greenway client, you’re in group three, whether you know it or not.