Quarterly Reports

Third Quarter Report 2018

Risk? What Risk?

Michael Kresh CFP® RF™

Dan Kresh FPQP™

We are concerned about risk in a very serious way. However, the biggest risk for our clients is not a temporary decline, or the short-term volatility in their investments; it is the risk that they will fail to reach their goals. In all our Facebook videos, we mention the fact that the bull market has continued almost unabated since March 2009 and it is getting long in the tooth. We know that a correction or bear market is overdue, it is inevitable. It is our job to minimize the long-term effects of short-term market fluctuations on the achievement of your goals.

In the third quarter, equity markets continued their recovery since the two biggest single day point drops in the Dow’s history in early February.[i] However we have recently seen daily volatility rise again. Factors like the Fed’s interest rate increases or international trade issues will continue to have short-term effects on the markets. As we have always said, we believe no one can reliably predict any short-to-intermediate-term movements in the market, yet the media’s constant attempt to do just that can lead to fear and greed for investors.

We remain strong believers that quality American companies will continue to be the cornerstone of any successful investment plan. However, we disagree with the herd about how asset allocation will reduce the risk of your portfolio over the next few years, and particularly about the perceived “safety” of bonds. One thing we do know is that “when interest rates go up, prices of fixed-rate bonds fall.”[ii]  From the early 1980s through 2008, interest rates (The United States Fed Funds Rate) fell from 20% (March of 1980) to .25% (December of 2008) and since the beginning of 2016 have ticked up from .5% to 2.25% as of September 2018.[iii]

Many advisors talk about your investment portfolio risk in terms that are vague and nebulous. Terms like “moderate” or “aggressive” could mean different things to different people, and for some a “moderate” portfolio may carry a much higher risk of failing to reach the investor’s goals.  Most risk models use past data to try to predict future results, though we know that this can have issues. The falling interest rates of the last 30 years coupled with the current rising interest rate environment could lead to an illusion of safety for bonds.

As always, we strive to help educate our clients and build portfolios to give them the best chance of reaching their goals while taking an amount of risk they are comfortable with.  We are leveraging new technology to analyze risk that allows us to look at things like the rising interest rate environment and how that may impact different investments.  We are continually looking for ways to be innovative, transparent, and informative about how we get the money you worked hard for, to work hard for you.

 



[iii]https://tradingeconomics.com/united-states/interest-rate

*Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Royal Alliance Associates, Inc. All Investing involves risk including the potential loss of principal. Past performance is not a guarantee of future results.

 

Securities offered through Royal Alliance Associates, Inc., Member FINRA/SIPC

Advisory services offered through Creative Wealth Management, LLC a registered investment advisor.

Not affiliated with Royal Alliance Associates, Inc.

 
 
 
 
Second  Quarter Report 2018
 

Summer Reflections

Michael Kresh CFP® RF™

Dan Kresh FPQP™

 

Our message after the first half of 2018 will not contain market commentary. We often talk about ignoring the noise of the news media so this quarterly newsletter will be tranquil, as we feel your summer should be. Now is as good a time as ever to remind you to be present and enjoy the moment.

So here is what we are suggesting. Take a day off, completely off. Go to the beach, sit by a pool, lounge in a hammock or go to a bar by the water. Gather some of your friends. Leave your smartphone behind, (or at least put it in airplane mode for a bit.) Put your toes in the water if you can. Get a pitcher of Margaritas, Mojitos, frozen drinks, a nice bottle of wine or a refreshing drink for you and your friends. Relax, maybe listen to your favorite summer music.

Contemplate the waves at the beach, the sun reflecting on the pool, maybe go to a place where you can see the sunrise or sunset. Think about anything other than work, the news or how your investments are doing. Do it for a whole 24 hours. Just let your mind wander.

After your day of reflecting, we will be here, filtering the noise. Give us a call if you want to talk about your investments or better yet what you thought about when you tuned out.

On a related note we are updating our policy regarding the delivery of quarterly reports. Please let us know if you would still like delivery via USPS each quarter, you may also request electronic delivery through encrypted email. If we do not hear from you, you will NOT automatically receive the next report, but we will reach out to you around the time we would send the reports to confirm your preference moving forward and go over your portfolio. Your preference can be updated with us at any time.

 

 

Securities offered through Royal Alliance Associates, Inc., Member FINRA/SIPC

Advisory services offered through Creative Wealth Management, LLC a registered investment advisor.

Not affiliated with Royal Alliance Associates, Inc.

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