You Can’t Always Get What You Want… But If You Try Sometimes

Markets got you down?  

As of May 16th, S&P 500 is -16% for the 2nd worse start in 80+ years. 

Wait, there’s more. 

Tech heavy NASDAQ is -26%, small companies Russell 2000 -20% and “favors the brave” (insert eyeroll) Bitcoin is -39%. 

Diversification in developed international -16% and emerging markets -17% is failing. 

Good thing there’s bonds. Oh wait, US bond market via the BarCap Agg Index -10% is worse start to a year ever. 

And cash, true it didn’t lose principal but purchasing power decreased -8.3% the last 12 months, and if you’ve been to a grocery store, auto dealer/service dept, barber or gas station, 8.3% inflation my… 

Don’t be Torn and Frayed, become Happy about the opportunity to roll your Tumbling Dice.

Yes, Rolling Stones reference to Exile on Main Street celebrating a 50th anniversary. The relevance? 

The Stones were on an amazing run of albums - Beggars Banquet, Let It Bleed (headline reference) and personal favorite Sticky Fingers. Yet, they found themselves exiled from Britian due to new 93% wealth tax, broke from a manager who’d stolen from them and sued by their record label. As vagabonds in France and later LA, they recorded what many consider their greatest album and then toured the US as year’s top grossing act, a first of record 9 times. 

Let me Shine a Light on 3 action steps to consider given down markets:

Roth Conversion - If certain investments you intend to hold for a long period are down -20% or more, then convert those a Roth and pay 20% less tax. Estimate your MAGI prior, as conversion is taxed as income impacting your federal tax bracket and % owed.   

Take Tax Losses - Face your mistakes, learn and move on. In taxable accounts selling at a loss builds capital losses to carry and offset capital gains over future years. If you believe the investment will come back, wait 31 days later to avoid wash sales. Remember, every Apple or Amazon from 2000, there’s dozens of JDS Uniphases, Lucents, Global Crossings, and CMGIs. 

Buy Quality When On Sale - People love sales, except when it comes to risk assets like equities. If not now, then when do you “buy low and sell high”? Sure, the market may go lower, but if you own quality investments you understand at a fair price, over time it will be time that matters most.  

Don’t overload on commodities, energy, TIPs and cash as this too shall pass on a macro level, since economic cycles rarely skip stages. Up next will likely be cooling housing values, layoffs disguised as reorgs and deflation via recession or soft landing by Fed’s raising of rates. 

Eventually a base for economic expansion is created but if you wait to see it, investment values will have adjusted in anticipation and opportunity past. 

Had the Stones simply stopped or not built upon their foundations in ‘71 until all things favorably aligned, one wonders about their legacy or even living to old age, let alone being the top grossing US tour in 2021. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Glenn Brown is a Holliston resident and owner of PlanDynamic, LLC, www.PlanDynamic.com. Glenn is a fee-only Certified Financial Planner™ helping motivated people take control of their planning and investing, so they can balance kids, aging parents and financial independence.

This article appeared in the June editions of Local Town Pages for Holliston, Natick, Ashland, Franklin, Hopedale, Medway/Mills, Bellingham and Norfolk/Wrentham.

Please call me at (508) 834-7733 or directly schedule a meeting to learn more about considerations for planning and investing so you can balance kids, aging parents and your financial independence.

PlanDynamic, LLC is a registered investment advisor. This article is intended to provide general information. It is not intended to offer or deliver investment advice in any way. Information regarding investment services are provided solely to gain a better understanding of the subject or the article. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable.

Market data and other cited or linked-to content in this article is based on generally-available information and is believed to be reliable. PlanDynamic, LLC does not guarantee the performance of any investment or the accuracy of the information contained in this article. PlanDynamic, LLC will provide all prospective clients with a copy of PlanDynamic, LLC’s Form ADV2A and applicable Form ADV 2Bs. You may obtain a copy of these disclosures on the SEC website at http://adviserinfo.sec.gov or you may Contact Us to request a free copy via .pdf or hardcopy.