Proactive Financial Steps to Consider and Added Perspective

As news of the coronavirus continues to dominate the headlines, we remain focused on best serving you and helping you navigate global events.  Please know we are thinking of you and pulling for the good health of your friends and family.


In our recent email communications, we provided sound and historically accurate perspective on what you do not want to do in times of market volatility. As this volatility continues, we wish to share several proactive actions for your consideration that can contribute value to your overall financial foundation and plan.  Please know that if you have accounts managed by us, we are proactively performing the relevant portfolio management items for you where appropriate.


Added perspective on current stock share price dip:

We are not partial owners of good companies/businesses (i.e. stock owners) for their share price the next day, month, or even year.  We own a diverse mix of businesses (stocks) because the economy and businesses that grow through the years can provide a solid source of rising dividend income and share price growth that has never driven a loss in the long term— keys to combating inflation during modern lifespans and the resulting multi-decade retirement periods. Patience and faith in the future are key for investors at such times.


Employer-sponsored retirement plans:

If you or a spouse have a retirement account through an employer, you may wish to consider the following actions. If you do elect to make any changes, you must do so directly as we cannot complete these on your behalf. 

  • Consider rebalancing your employer-sponsored retirement account portfolio. Bond funds have likely held up relatively well during this stock share price dip. So, to bring your accounts back to the risk allocation mix you intended, you could sell some bond funds and buy some stock funds. This can achieve the effect of selling bonds relatively high and buying stocks low.  If you are solely in a target retirement date fund (such as 2035 fund), the rebalancing occurs behind the scenes already.
  • If you are not yet reaching the permitted IRS limits, consider boosting your contribution percent if cash flow permits.

Personal account(s) / debt management:

  • To be weighed within the context of your overall financial plan, and current versus future tax bracket considerations, consider whether a pre-tax IRA conversion to a Roth IRA is of value.
  • If you are getting close to paying off a residence and/or second home mortgage, student loan, or any debt that has a relatively high interest rate, it may be timely to utilize any lower yielding money market, liquid savings, or muni bonds to achieve a full payoff or meaningful principal payment to further accelerate payoff.   

We are only a phone call away, so please call to discuss any of these ideas or questions.



Continued Stock Volatility Coaching

March 9, 2020 was the eleventh anniversary of the crescendo of global panic that marked the bottom of the bear market of 2007-09.


It is to me a thing of the most wonderful irony that the world has elected to celebrate this iconic anniversary with – you guessed it – another epic global panic attack.


At yesterday morning’s opening level of 2,764, the S&P 500 was down over 18% from its all-time high, recorded on February 19. Declines of that magnitude are fairly common occurrences – indeed the average annual drawdown from a peak to a trough since 1980 is close to 14%.* But such a decline in barely a month is noteworthy, not for its depth but for its suddenness.


As we all know by now, the precipitants of this decline have been (a) the outbreak of a new strain of virus, the extent of which can’t be predicted, (b) the economic impact of that outbreak, which is equally unknown, and (c) most recently, the onset of a price war in oil. (That last one is surely a problem for everyone involved in the production of oil, but it’s a boon to those of us who consume it.)


The common thread here is unknowability: we simply don’t know where, when or how these phenomena will play out. And in my experience, the thing in this world that markets hate and fear the most is uncertainty. We have no control over the uncertainty; we can and should have perfect control over how we respond to it.


Or, ideally, how we don’t respond. Because the last thing in the world that long-term, goal-focused investors like us do when the whole world is selling is – you guessed it again – sell. Indeed, I welcome your inquiries around the issue of putting cash to work.


On March 3, the erudite billionaire investor Howard Marks wrote, “It would be a lot to accept that the US business world – and the cash flows it will produce in the future – are worth 13% less today than they were on February 19.” How much more true this observation must be a week later, when they’re down 18%.


This too shall pass.

Perspective on coronavirus

After a spectacular 2019 for most diversified investors, this week’s S&P 500 index value appears to be on track for closing the week at a significant dip, and as of this writing represents an approx. 10% year to date dip.


We have therefore been invited by financial media to suspect that the blended value of 500 of the largest, best financed, most profitable businesses in America and the world has “lost” value – with more “losses” to come – due to the spread of a new strain of coronavirus that started in China.


Permit me to doubt this, and to suggest that you – as goal-focused long-term investors – join me in doubting it.  


I do not claim to have any idea how far this outbreak will spread, nor how many lives it will claim, before it is brought under control. I’m reasonably certain that many of the world’s leading virologists and epidemiologists are working on it, and I believe that their efforts will ultimately succeed. Clearly, this is nothing more (or less) than my personal opinion.


But if the rich history of similar outbreaks in this century is any guide, this would seem to be a reasonable hypothesis.


I draw your attention to:


  • SARS in 2003-04, also originating in China 

  • The bird flu epidemic in 2005-2006

  • In 2009, a new strain of swine flu

  • The Ebola outbreak in the autumn of 2014

  • The mosquito-borne Zika virus outbreak in 2016-17


    Without belaboring the point: the super-spreader of SARS – a fish seller – checked into a hospital in Guangzhou on January 31, 2003, basically infecting the whole staff. The epidemic exploded from there.  On that first day of the litany of epidemics cited above, the S&P 500 Index closed at 855.70. Seventeen years and six epidemics later (including the current one), yesterday’s Index closed fairly close to three and a half times higher. I’m confident that you see where I’m going with this.


    A couple points from Jeremy Siegel today, a well-respected Wharton school professor:

  • This is serious but limited – certainly not like the 2008 financial crisis.  No systemic problems in the financial area (i.e. will not freeze credit like during the financial crisis)

  • Long term uncertainly is not at all increased as a result of this virus

  • Probably no more than a one-year hit to earnings, so recovery could be swift


As always, our team welcomes your inquiries around this issue. In the meantime, I think the most helpful – and certainly most heartfelt – investment advice I can offer would be that you continue to focus long-term and not panic over a serious, but most likely limited financial event.


Stop watching the dog and keep your eye on the owner…

Stop watching the dog and keep your eye on the owner…

May 2019, by Mike Boyle, CFP®

As coaches, we are always on the lookout for teachable moments. In caring for hundreds of client households, we would be remiss if we didn’t acknowledge significant investment account value dips during the 4th quarter of 2018, and strong share price recovery through the end of April 2019. 

First a few facts:

  • The value of the S&P 500 index fell almost 20% at one point during the 4th quarter of 2018, and for the full calendar year was down about 4.4% (with reinvested dividends). Note: small cap domestic and international stock indices had a double-digit dip in 2018.
  • The value of the S&P 500 index gained 13.6% during the 1st quarter of 2019 (with reinvested dividends).

Putting these facts together in dollar terms:

  • $100 invested in the S&P 500 at the start of 2018, was at one point valued down around $80, but finished the year valued at about $95.  
  • By the end of March 2019, the investment reached a value of approx. $108.

Solid progress in a span of 15 months – but what an adventure requiring patience and confidence along the way!

The lesson:

If we all had the luxury of just seeing annual stock share price valuations, no one would have to endure watching the wild ups and downs.  It would also limit the number of news media headlines predicting the world going to hell in a handbasket.  But, since stock share prices are valued daily, such headlines are just a few clicks away on a smartphone – hence we wish to propose a strategy for keeping a healthy perspective.

As a financial planning firm, we coach clients to adopt the following perspective:  Stop watching the dog and keep your eye on the owner….

If you are on a beach after lifeguards and most others have gone home for the evening, you will often see a walker with her dog off leash.  The dog owner is gradually walking along the water in a very specific direction. Yet, her dog is often running into the water, then up into the sand to chase a seagull, then back into the water, etc. 

In this analogy, the dog represents the volatility of daily/monthly/quarterly stock share prices….they can move a lot in a short amount of time in several varying directions. The owner is a good proxy for the actual true value of a share of stock over time— she has a specific direction and destination that given enough time will likely be reached.  Of course, she may pause occasionally, even backtrack a bit to pick up a shell or get her dog’s attention. Heck, even the dog’s more volatile zigs and zags don’t reach what the news media would lead you to believe…the dog’s run into the water doesn’t mean he will swim out to sea with no land in sight, and a dog’s run to the dunes doesn’t mean he is destined to eventually arrive at the Grand Canyon. 

Similarly, the value of a diverse mix of stocks (aka: partial ownership in many companies represented by the S&P 500 index) has historically gone in a very specific direction (up), albeit with some occasional and significant dips in value.  For example, the S&P 500 index was valued at $102 on January 1, 1969, when many 50 year old clients were born.  It was valued at $2,602 on January 1, 2019.  Not counting reinvested dividends, their investment in the S&P 500 index for that 50 year period was up 25 times.  Most importantly, for all investors, and especially retirees who often require a rising income over several decades in retirement, inflation only required $7 by 2019 to buy what $1 bought in 1969.  So, if you are appropriately concerned about what inflation might do over time in retirement, the value of an investment in a diverse mix of companies represented by the S&P 500 index increased 25 times, while the cost of buying stuff increased by only 7 times.

Of course, the historical relative difference of stock values versus inflation doesn’t guarantee anything about the future – but if I am looking for a sunny destination I might use historical sunny days per year to compare Phoenix to Seattle…one has about 300 and the other only 150. 

So, whether you go to the actual beach or shore this year or not, please consider a strategy of “stop watching the dog and keep your eye on the owner” as you decide what frequency you find most healthy to check investment account values.  Hint, daily is not recommended! 

On behalf of our team, we wish you a safe and enjoyable spring and summer!




All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.



“We do not have, never have had, and never will have an opinion about where the stock market, interest rates or busi­ness activity will be a year from now.” Warren E. Buffet