My first full week as a financial advisor was the week of 9/11/2001. It was a very surreal time to start a career in financial planning. The markets were in the middle of the dotcom bubble bursting and the onset of a recession, however, real fear around the markets had not set in. Most of the expectations with new and potential client were still based on the returns from 1995-1999. It took another year of the market continuing lower and lower before expectations finally shifted fully.

During the 2008 financial crisis, I was in a Branch Manager role at that time and working with 20 advisors as they were helping their clients through a similar market decline. There were multiple times in 2008 where I felt the market was indicating the worst was behind us before the larger collapse in late 2008 and into early 2009.

I feel lucky to have started my career in 2001 and still early in my time in this industry to go through 2008 and understand that markets do not just keep going up forever and that fundamentals do eventually matter. Perhaps since 2010 that hasn’t mattered as much as the Fed has pumped $Trillions into the system to prop up the markets. Perhaps that also doesn’t matter as much right now as the Fed and government have committed massive amounts of money to provide liquidity to the system.1

In our models, we have been cautious and conservative overall since early March. From my experience, the data we are seeing and that I have been discussing each week on my videos has been some of the worst ever, or at least since the Great Depression. Our goal in managing money for clients is to protect first, and grow second. Perhaps it will be different this time. Perhaps the market can go to new all-time highs with so much uncertainty still out there.

Some of the questions I we are considering right now: What happens when the Paycheck Protection Loans that provided short term liquidity begin to run out this month. What happens when the Pandemic Unemployment benefits of $600 per week on top of state benefits run out in July. How will the Fed and the Government justify continued stimulus programs if the economy is doing better than expected and the market is near all-time highs? I have seen some headlines recently that COVID cases are back on the rise as well. If a second wave hits, what will that mean for the economy? What will corporate earnings tell us in July? Are businesses as excited about the economy and their future prospects and stock market investors?

We have made some adjustments in our models this week to account for the apparent lack of risk. We will be less defensive and add some offense in sectors that we believe will do well, at least in the short term, until some of these uncertainties shake themselves out in the next couple of months. However, I am still very concerned about how things will play out in the coming months. I got 2 good lessons early in my career that it is not different, eventually fundamentals will matter again. The big question is, will those fundamentals improve significantly over the next couple of months to show the recovery is what the market thinks it is, or will it show an economy that is far from running on all cylinders?


Investment advice offered through Integrated Financial Partners, doing business as konvergent wealth partners, a registered investment advisor.

konvergent wealth partners and Integrated Financial Partners are registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. Homer Smith is a private wealth advisor affiliated with Integrated and also only transacts business in states where he is properly registered or is excluded or exempted from registration requirements. Registration as an investment advisor or financial advisor does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of Homer Smith as of the date of publication and are subject to change and do not constitute personalized investment advice. Mr. Smith should be consulted before implementing any of the strategies presented. No content should be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell anything mentioned herein. Neither Integrated nor Mr. Smith represents, warrants, or implies that the services or methods of analysis employed by the it or Mr. Smith can or will predict future results, successfully identify market tops or bottoms, or insulate clients from losses due to market corrections or declines. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this webinar serves as the receipt of, or as a substitute for, personalized investment advice from Integrated or Mr. Smith. Investments are subject to market risks and potential loss of principal invested, and all investment strategies likewise have the potential for profit or loss. Past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and therefore can be no assurance that any specific investment will either be suitable or profitable for a client’s portfolio. There are also no assurances that any portfolio will match or outperform any particular benchmark.

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