A Bull-Market Decade Ends, But Our Planning Strategy Continues

A Bull-Market Decade Ends, But Our Planning Strategy Continues

by A. Scott White, CFP®, ChFC®, CLU®
President, Scott White Advisors

When it comes to investing, some memories can be short.  e longest-running bull market in U.S. history celebrated its 10-year anniversary on March 9, 2019, and the bull market has continued since then. But it followed a 17-month bear market known as the  financial crisis of 2007-2009, when the S&P 500 lost approximately 50% of its value.

Today, the U.S. hasn’t had a bear market in over 10 years, but bull markets are o en followed by bear markets.  e internet bubble bust in 2000 was followed by stocks in the S&P 500 index reaching all-time highs on October 9, 2007, and that was followed by the great recession of 2008, only to see the S&P 500 index reach another all-time high on March 28, 2013.

I don’t believe the average investor is prepared for a bear market. Many investors are heavily invested in the stocks that did well this past decade, so they might now own a portfolio made up of very expensive stocks—or stocks of companies with a lot of debt and little pro ts—and those stocks did just fine riding the coat tails of the recent bull market. Others were so frightened by the  financial crisis of 2007-2009 that they never invested in stocks—and they missed the biggest 10-year bull market ever. Now they’re asking themselves if this is the right time is to go all in and buy stocks again. In my mind, neither of these mindsets will do well in the face of a lifetime of market unknowns for the years ahead.

Sir John Templeton, the legendary investor, said, “ e four most dangerous words in investing are, ‘This time it’s different’.” Recessions are part of the economic cycle, and the U.S. has been through 10. Also, since the market and the economy move in different cycles, trying to anticipate the ups and downs of the market is practically impossible. Emotions such as fear, or even greed, can blind investors to their financial goals. In fact, entering and exiting the market based on emotions has been proven to adversely affect the returns of individual investors.

Hence, at Scott White Advisors we don’t build portfolios based on events that may or may not happen. We build them based on our clients’ unique family situation and needs. Those factors are the foundation of a written Investment Policy Statement (IPS) that articulates the investment objectives and policies applicable to each client’s investment portfolio.

Bull market or bear, the number one factor for investing success is to avoid the permanent loss of capital. And a diversified portfolio with an asset allocation designed to meet your family’s unique needs is crucial to its success. With such a portfolio, you benefit from my years of experience following the blueprint of a well-developed Investment Policy Statement that will help increase your probability of avoiding bad decisions based on emotions. And my guidance will coach you to help make the right decisions in times of market upheaval—so that you and your family have a better opportunity to achieve lifetime and generational goals.