Like most people I am reflecting and asking what this pandemic is trying to teach us? What do my clients need now? What is the opportunity to get better in what I do in the midst of it all?
I have always believed my most important job is to bring more clarity to my clients about their finances. When everything is blurry and we don’t know what the future holds it is difficult to feel confident.
As I mentioned in my previous blog, I am not emotionally attached to your money. When no emotions are involved logical solutions can be found and implemented.
As all crises do, this one also revealed what was already obvious:
It is easy to feel like an expert when markets are performing well. When the market was doing well for the last 10 years and people watched their account values grow, they started to believe they were really good at this. However, when Covid-19 hit the market some of them panicked and sold at the bottom.
Fear and greed drive the markets. If you follow what everyone else is doing you may not reach your own goals. As Warren Buffet said “Be fearful when others are greedy and, greedy when others are fearful”. However, it is not easy to be a contrarian.
People realized they are not as risk tolerant as they thought they were. Suddenly, investments that capture some of the upside and none of the downside (fear) were in high demand whereas they have been shunned in the past because of the limited growth potential (greed).
It is not prudent to put all your eggs in the same basket. It’s been difficult for most investors to have rules based investment strategy while equities have been performing well as nobody was willing to ‘sacrifice’ some of the upside by having a diversified portfolio. We all want it all!
Our buddy may not have all the answers to your financial questions. We all ask good friends for advice on a lot of topics. It is OK and normal. However, when their advice does not work in our favor, we realize we may need some expert help. During the pandemic this became more obvious to some then others.
We don’t know what we don’t know. What you don’t know may hurt you financially. Now I see more people are open to work with a financial advisor. We are more fearful and we want to make better decisions for our future.
Yes, most people are fearful and not sure what the future holds. Yes, some of us made mistakes with panic. As I mentioned in my previous blog “Money is always emotional”, it is not easy to be unbiased and logical with our money decisions, but working with a financial advisor may help.
Please contact me if you have any questions.