Don't Fear the Bear
Austin Carroll is a financial advisor at Cornerstone based in Reno, NV. Austin has passed his Series 65 Securities Registration Examination. He helps clients create customized financial plans based on their unique financial goals by addressing topics such as income, investments, and taxes.
DON’T FEAR THE BEAR
The reports are in, and the media is abuzz with non-stop coverage about whether we will have an impending recession or not. While watching television, I have seen one ‘expert’ say that a recession is imminent followed by the very next ‘expert’ saying that we will have record highs by the end of the year. So how in the world is a retail investor supposed to invest when even ‘experts’ can’t agree about where the economy is headed? Truth is, if you have an investment strategy, you could benefit from either a recession or an economic boom.
Warren Buffet is often echoed of saying “buy low and sell high,” but most investors don’t truly understand what that means. When an investor is buying low and selling high, they aren’t always buying at the lowest low and highest high. The more prudent method is to buy when the investments are priced at a discount to the value of the actual underlying asset. Then, if the price pushes even lower, you buy more, thus dollar cost averaging down. That’s how you truly buy low, but what about sell high? Well, selling high is just the opposite of buying low. Once the value of a company has exceeded what is determined as the ‘fair value,’ anything over that is selling high. This is when self-discipline comes into play. A prudent investor will maintain their risk exposure by selling off enough of an investment to keep the risk exposure in line with their risk tolerance. I believe that’s where most investors make their mistakes and why an investment advisor and manager can be of benefit. Advisors and managers help toe the line of risk management.
Taking the idea of ‘buy low, sell high’ and turning it into an investment strategy is the tricky part. Creating a strategy that takes advantage of both downturns and economic booms is what Cornerstone strives to accomplish for its clients. When the market is down, we take advantage of the situation and conversely when the market is up, we push away to reduce our risk exposure. By using our Retirement Money Map as a guide, we’ll help you to unlock the knowledge you need to take control of your money, and live a confident retirement, no matter what challenges arise. You envision the life you want to live and we’ll help you create a plan that leads you down that path. Give us a call, we look forward to helping you to live your ideal retirement.