Greg Morris has a good article this week at StockCharts.com. In it he refers to a line from a friend of his that goes “I know that friends shouldn’t let friends buy-and-hold, and I want to tell them there is a better way. But now that the damage is done, is it too late to help them?” The context was about clients who had been suffering downturns in their portfolios and were faced with the dilemma of hanging on to their holdings and wait for recovery or dump some stuff and go for new opportunities. Greg acknowledged that if the losses were due to a general downturn in the markets and not specific to anyone’s individual holdings and if the markets were truly at or near a bottom, then holding the current selections might be the fastest way to recover. Note that in the previous sentence the word ‘if’ appears twice. Our sentiment is that this kind of thinking looks a little like coin-flipping — even odds of winning or losing. Not ideal.

As Greg says:

“It always makes sense to avoid losing money. It seems irrational for someone to say, “I’ve lost most of my money, but I’m comfortable losing some more.” But that is exactly what many investors are saying, not with their words but with their actions. They’re so caught up in the “If I sell now, I’ll take a loss” syndrome, that they completely lose sight of the fact they might well lose more, and they don’t understand how difficult it is to recover losses. Remember, if you lose 50%, you need to double your money just to get back to even.”

My rules-based trend following model works in all types of market conditions. I constantly tell people that there is no such thing as a perfect investment strategy. I certainly do not believe that my approach is perfect, but it does allow me to do okay in all types of market conditions. When the market is going up in a meaningful way, I participate as much as possible. When the market risk is too high, or the trend is down, I protect against major losses with stop loss protection. If the long-term trend is sideways, I can capture some gains when they come along and then hang onto them during the bad times.”

Everyone knows, or should know, that there are always risks associated with investing. Our job is to assess and manage those risks.

Ron’s Market Minute 5/10/2019 — Tariff Troubles

Not a good week for markets. The uncertainty surrounding the issue of U.S. tariffs on Chinese goods may be worse than the actual impact of the tariffs themselves. In any case we’re pleased that President Trump along with Mnuchin and Lighthouser are all maintaining a civil discourse and a positive outlook. Trump, in particular, tends to treat his adversaries with as much kindness as possible when he wants them to come to an agreement…and believes that an agreement is within reach. It is interesting that for three days in a row, Wall Street’s major indexes all opened in deep red territory but became less pessimistic as the day went on. Here on Friday morning, the pattern appears to be continuing.

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw[@]denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

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*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.

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