Your Financial Advisor Says the Sky is Falling - Don't Believe It!
- R.T. Borom
- Jun 10, 2020
- 3 min read
Updated: Apr 27, 2021
Welcome to the first edition of - The Don't Die Broke Talkin' Finances Virtual Coffee Shop!
I was taking a long walk this past Saturday through my neighborhood. Searching for comfort during this pandemic and social unrest, I most certainly appreciated hearing the birds chirping, basking in the morning sun, and smelling fresh morning air.
I happened past a good friend's home. She was gardening because she was locked out of her home. We shared a good laugh. As we spoke, we somehow or another wandered around to the status of Don't Die Broke. Wait - this was honest conversation wandering as she is a journalist and hooked me up with her cover designer and guided me to her printer to publish Don't Die Broke. I told her sales are great and my Pops and I are happy to educate so many about the nuts and bolts of the stock market!
She told me her financial advisor/planner, the man she trust to help her in building wealth in the stock market, was saying the sky was going to fall again with the stock market...to look for the BIG CRASH sooner rather than later. This is the third time I've heard this conversation from friends regarding their advisor's forecast. Hhmmm...
Financial advisors and financial planners absolutely serve a purpose. But you have to have a basic understanding of the stock market AND study trends to make sure your advisor is being effective.
Chicken Little the sky is falling advice is not what I would want to hear as a client. Especially in today's market! Fortunes are being made as we speak!! I consider this advice to be more protective of the advisor's reputation than concern for helping you invest & build wealth. Granted, there are many factors to consider such as risk tolerance, but making money has never gone out of style.
In a sense, because of rapidly emerging technologies, world instability (COVID-19), and businesses that thrive despite chaos (Amazon, Shopify, Zoom Video, cybersecurity companies, to name a few), the market seems more segmented than ever - a high stakes game of the haves and the have nots. Technology related businesses that can take advantage of trends emerge victoriously. Businesses long in the tooth (I'm sure you can think of many), are stagnant and grow slowly if at all. Let's look at this chart.
This chart is from Bank of America through May 2020. Is the sky falling? Yes for many sectors! And absolutely if your advisor is not observing trends and moving a portion of your investments to areas of growth. If you owned technology-related stocks, you would have lost value like every sector did during the most recent crash. But, you would have MORE than made up the stagger since the crash. Some stocks are up 200% - 300% or more since the crash. And, these are not high-risk investments in many cases.
Let's take a look at the E-commerce sector. This, of course, includes Amazon and other companies such as Shopify and Visa. Imagine how much of Retail Sales E-commerce owns percentage-wise now after everyone has been home during the pandemic shutdown. E-commerce penetration may be at 30% or more as of this writing.
All this to say - I am not here to smash or disparage financial advisors and financial planners. They serve a purpose in helping you build wealth in the stock market. They definitely serve a purpose in building wealth after 50 or 60. But if your advisor or planner is saying the sky is falling, that simply IS NOT TRUE! The stock market may be divided into two or three sub-markets now. Trends, like our world, will evolve quickly and growth will be rapid. The market has historically risen and fallen. Allocating a portion of your portfolio to be invested in trends can provide protection and faster recovery from inevitable market declines.
The question you must ask of your advisor is this: are they forecasting the sky to fall or are they failing to take advantage of opportunities that can provide shelter during down periods Food for thought at the virtual coffee shop! Remember y'all - Don't Die Broke!!
Stay safe,
R.T. Borom
June 2020
Learn more about investing in Don't Die Broke: Easy Steps on How to Save, Invest, and Build Your Wealth by R.L. Borom.
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