Happy New Year!

College football bowl season is so much fun especially if you are a college football fan.  This past weekend I watched my Alma Mater, Clemson, defeat Ohio State in the college football playoff semi-final game to advance to the college football playoff national championship game.   I was thinking about how strong the Clemson defense was on Saturday night.  Three times they stopped Ohio State in the red zone allowing just 9 points instead of 21 points.  In addition to that, on the last play of the game, Clemson intercepted a pass from the Ohio State QB to win the game for the Clemson Tigers.  Defense wins games and it also wins championships.  I don’t know if Clemson will win the National Championship again this year, but I do know they have a great defense, and I trust they will do it again on January 13^th.  You may be wondering what in the world does this have in common with financial planning and investments?  Read on.

2019 was a great year for the stock market and the stock market could provide for even more growth for your investment portfolios in 2020.  However, we will be adding more defensive measures to your portfolios this year and we have already started!

Looking at the stock market since the great recession ended in March 2009, investors have made big strides in this 10+ year bull market.   Will this bull market come to an end in 2020?  I wish we had a crystal ball, but we don’t. However, just because this stock market is now the longest running bull market ever does not mean it has to come to an end yet.  We expect 2020 to be the year of adding defensive investments to your portfolio as greed and valuations become extreme due to the great results of 2019.

There will be two ways we will incorporate defense into the portfolio: first, rebalance.  Since the equities positions in your portfolios have increased faster than the other positions, we will be selling some of the equity gains and buying more bond and cash like positions in 2020.   Second, we will transition some of the current growth equity funds to more of a defensive equity allocation.  Our goal is to reduce some risk in your portfolio but still allow your portfolios to work well should the markets continue to increase.

Unfortunately, the stock market does not always go up.  If you have $1,000,000 in your investment account and the stock market corrects by 50% you now have $500,000.  In order to get back to your $1,000,000 investment amount, you now need a 100% return.  We believe if we can minimize your downside risk and loss over the next 3-5 years you will be in a better position than if we continue to stay in growth mode.

To kick off our theme, on Saturday, March 7^th we are teaming up with Mantra Fit (Fitness and Wellness Company in Severna Park, MD) and bringing in Phillip Koontz a previous US Navy Seal Combat Veteran who is a motivational speaker & self-defense instructor to speak at our kick-off event “Defend Yourself and Your Retirement Portfolio.”  If you are interested in attending, please send us an email and we will send you additional information regarding the event.

Going back to the Clemson analogy from earlier, we will still have offense in your portfolios, but we are slowly making your defense stronger so we can win at retirement!

Happy Investing for 2020.

 

Spencer D. Neal, AIF®