COLUMN: Back to the Future in the Financial Market

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So, interest rates are crashing around the world, the 10-Year U.S. Treasury is around 1.75 percent and stock markets are stuck in trading range …bookended by a good bit of volatility.

If I didn’t know better – I might be thinking I jumped into the DeLorean with Doc Emmet Brown and went “Back in Time” to 2016. The above scenario is precisely what was going on in early 2016, which left investors in a bit of a “What Next?” moment.

We are seeing a near instant replay of 3-½ years ago, albeit with stock market values significantly higher. Once again – nearing a generational low in interest rates, heightened volatility, and questions about “What’s Next”?
The good news is we can take lessons from the recent past and use strategies from the same playbook. What to do in an environment like this?

Here are five tips from our Arsenal for Navigating These Waters:

  1. Seek opportunities to lower borrowing costs. Did you miss the
    generational refinance windows in 2012 and 2016? Well, Back to the
    Future: 2019 is here to offer a chance to restructure debt.
  2. Re-assess your goals. The “bottom” of the market and beginning of the
    current market cycle was in 2009. That’s 10 years and six Boston sports championships ago (ooof – I’m gonna catch some guff from Yankees & Steeler fans). Are you 10 years closer to retirement? Probably … if so, what got you HERE may not get you through the next 10 years.
  3. Re-assess your risk. Markets do not go up forever … nor do pullbacks last forever. Be real about the risk you can handle and what kind of returns you actually need.
  4. Rebalance Portfolios. Stocks have made investors a good amount of
    money over the last decade. Be sure you have exposure to non-stock
    investments. Stuck on how or what to do? Ask for help.
  5. Stick to the Program. If you have a well thought out financial plan, or even systematic saving that has served you well over a number of years … stick to long term strategies for long term goals. Use the above four tips for opportunities to adjust the plan.

Much like a series of movie sequels (enter Back to the Future reference number 3) themes have a way of recurring. Recognizing these themes as moments for opportunity and reflection are often the best tools to use during times like these.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Watertown’s Doug Orifice is the owner of Watertown-based Arsenal Financial, LLC.He has been helping families and business owners with retirement planning since 1999.

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