June 15, 2022
GUIDANCE IN TURBULENT TIMES
By Kathryn Haggitt Fisher
With continued COVID outbreaks and the war in Ukraine, the first half of the year has been challenging, to say the least. Setting aside the tragic human toll, they have also resulted in supply chain disruptions around the globe. In addition, inflation is the highest we’ve seen since the early 1980s and central banks around the world have begun to increase interest rates in response. Taken together, this is a perfect storm that’s driven financial markets to bear market territory. (A decline of 20% or more is referred to as a bear market.)
It is during times like these that having a financial advisor whom you trust to do what is best for you makes all the difference. A good advisor is a resource during challenging times and helps both by planning in advance, so you’re prepared for market shocks, and by providing a stable guide when a shock hits. At Fulcrum, we work with you to develop a plan that models in market shocks like this before they happen. We’ll help you understand your worst-case scenario ahead of time, so when the headlines are troubling, you’re better prepared and may have fewer worries about you and your family’s financial stability.
When severe down markets do occur, we’re here to guide you through and help you keep the long-term in mind. It’s hard not to get emotional and make mistakes that can have a lasting impact on your portfolio. Retail investors often panic and sell when they should be holding – or better yet, adding to – investments. On the flip side, they typically have a fear of missing out and wait to buy until the market has peaked. A good advisor can help you avoid these kinds of mistakes. We’ll also look for any tax and estate planning opportunities that reduced market valuations might have made available, such as loss harvesting, or gifting assets to heirs at lower valuations.
In addition to outlining a wealth plan for you and your family and ensuring you stick with it even when times are tough, a good advisor will explain what you are invested in and why, and how the various asset classes you are exposed to are likely to behave in down markets. (Of course, investments don’t always perform as they have historically.) When you know what you’re invested in and understand the rationale, it’s easier to stick it out through tumultuous markets.
While it’s not possible for an investor to outperform the markets all the time, and while even the best managers don’t always meet our expectations, we do believe active managers can add value, particularly in volatile markets or in bear markets – such as what we’ve experienced this year. Fulcrum’s approach utilizes a combination of both styles; we take an active approach in some areas and use index funds in situations where we doubt we can find a manager able to outperform their benchmark after fees.
At Fulcrum, our clients trust us to make decisions for them. We combine the expertise of our in-house investment analysts and portfolio managers with the wealth management expertise and high-touch support of our wealth strategy team. The result is a unique approach that allows our clients to feel financially secure, to understand what their worst-case scenario might be in an extended down market, and to reflect their values in their investments and their overall wealth plan. Please reach out to your team any time with questions about your investments, the economy, or the impact of all of this on your long-term wealth strategy. And if you know of anyone who could use some financial guidance and peace of mind, please have them contact us.
Unless otherwise noted, data presented in this report is from recognized financial and statistical reporting services or similar sources including but not limited to Reuters, Bloomberg, the Bureau of Labor Statistics, or the Federal Reserve. While the information above is obtained from reliable sources, we do not guarantee its accuracy. This report is limited to the dissemination of general information pertaining to Fulcrum Capital, including information about our advisory services, investment philosophy, and general economic and market conditions. This communication contains information that is not suitable for everyone and should not be construed as personalized investment advice. Past results are not an indication of future performance. This report is not intended to be either an expressed or implied guarantee of actual performance, and there is no guarantee that the views and opinions expressed above will come to pass. It is not intended to supply tax or legal advice, and there is no solicitation to buy or sell securities or engage in a particular investment strategy. Individual client needs, allocations, and investment strategies differ based on a variety of factors. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators. Index performance does not include the deduction of fees or transaction costs which otherwise reduce performance of an actual portfolio. This information is subject to change without notice. Fulcrum Capital is an SEC registered investment adviser with its principal place of business in the state of Washington. For additional information about Fulcrum Capital please request our disclosure brochure using the contact information below.