As we are nearing the end of 2009, it’s great to reflect on it’s impact on our financial lives. We entered the year with great fear, perhaps the next “Depression” was upon us. After all, 2008 ended as the worst year for capital markets since 1931! (General markets were down about 50% from their peak.)
In March, world markets seemed to bottom out, with the recovery also matching historical precedence in its strength over a relatively short period of time.
Who “survived the storm” the best?
Generally, those who had a strategy to follow. They were able to revisit their strategy, determine how recent events impacted on their strategy, and make the necessary adjustments. These people were able to take proactive action and felt confident that they knew the impact of the circumstances on their plans.
Who suffered the most during the storm?
Generally, those who were “investment-focused” suffered the most. Seeing parts of a portfolio falling 50% or more can cause a lot of sleepless nights. A lack of a written strategy caused well-intentioned people to make decisions based on recent events (and their emotions), rather than based on their objectives. A couple clients who succumbed to their emotion (against their strategy and my advice) suffered a “double whammy”- temporary losses while prices were down, and missed opportunity on the recovery!
Fortunately, the vast majority of clients were able to reflect on the circumstances of how their strategy was impacted, and make rational decisions based on the plan.
If you were impacted by the craziness of the last couple years, and would like to discuss how you can have a strategy built in alignment with your highest priorities, give me a call, or email. (807) 467-4425
Enjoy the last part of 2009, and all the best in 2010!
Sincerely,
Rob