June 1, 2020
“THIS TIME IT’S DIFFERENT.”
That’s a phrase we usually associate with market tops. Just before the internet investment bubble burst, for example, we heard rosy economic forecasts and excellent rationalizations for inflated stock values. As we know, markets will right themselves; bubbles will burst. Now we are in a very different situation, with unprecedented economic distress. It really is different for the financial markets.
We’ve seen breathtaking global market contraction. Unprecedented government reactions. Uncertainty about the course of the pandemic hangs in the air over everything. “Don’t panic” may sound soothing, but it is not an investment plan.
We can’t offer you a panacea for these circumstances, and you should beware of anyone who says that they can. Events may force fundamental changes in our global financial infrastructure.
They will take time to unfold. In the meantime, we invite you to work with us to ride out this financial storm.
We do have faith that the markets will, ultimately, stabilize again.
We don’t know how long that will take.
Whether you already have an account or trust with us, or that relationship is still in our future, we invite you to talk with us about your concerns. We are here for you.
We can’t know when stock prices will reach their low point, just as we can’t predict when the corner will be turned on the pandemic. But when that low point is reached, stocks may represent the investment opportunity of a lifetime. The Federal Reserve and governments at all levels will be working overtime to restore the economy. In time, if they succeed, that will be reflected in the stock market indices.
Rapid trading, trying to get into and out of the market during periods of extreme volatility, may be hazardous to your wealth. A longer-term focus has a higher probability of success. In that regard, if you continue with a program of saving for your retirement, such as in a 401(k) plan, you will be purchasing more assets at lower cost.
Staying optimistic during a crisis such as a pandemic is hard. It is a test. But America has come through worse tests and lived to prosper.
WE ARE A FIDUCIARY
Today’s investors have more choices than ever for managing their investments—including doing it themselves. In the internet age, access to extensive information and sophisticated tools can make everyone feel like an expert. But not everyone really is an expert.
We are fiduciaries, which makes us different from other investment managers. That status does not make us infallible, nor does it come with a crystal ball for seeing into the future.
But it does mean these things:
• We are subject to special legal duties of fidelity and loyalty to our clients. When it comes to trust management, we are required by law to put the interests of trust beneficiaries ahead of our own
• Trust assets must, by law, be kept separate from the bank’s assets
• We are subject to audit and regulatory supervision
• Our fees are linked to the size of the accounts that we manage, not to the number of transactions we generate. That means our investment advice can be truly unbiased
• In managing trust assets, we must take into account the interests of both present and future beneficiaries, which is an unusual investment perspective. This approach is not risk free, but it tends to be risk averse
• Because investment management is a core part of our business, we are professionally staffed and equipped for the job.
If you would like to learn more about “fiduciary duties,” we will be pleased to meet with you at your convenience.