Quarterly Client Letter – 2020 Q1

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“What the imagination can’t conjure, reality delivers with a shrug.”
—Trumbo (movie voice-over)

Brace yourself. Your newly released quarterly reports are highly, highly likely to leave you feeling at least a little disheartened. No matter how much we’ve blathered on about preparing for perilous times like these, planning for it versus actually enduring it is about the same as watching a tornado on YouTube versus being swept into one in real time.

And, yet, we stand by our advice: For emotional and financial turbulence alike, your best bet when you’re in the eye of a storm is to hunker down and trust in preparations already made.

If you’re comfortable with how we’ve been managing your wealth so far, expect more of the same. As your steadfast fiduciary advisor, we will continue to help you implement the kinds of investment opportunities that make sense for you and your portfolio. These may include:

  • Rebalancing your portfolio when warranted, to stay on course toward your long-term goals.
  • Tax-loss harvesting where practical, to offset the costs of recently incurred and/or future taxable gains. (Yes, we still fully expect to see future market growth!)
  • Roth IRA conversions when they may benefit your retirement planning.
  • Seizing other opportunities when your plans call for it. For example, if you’ve been holding a concentrated stock position to avoid incurring taxable gains, now may be the perfect time to reduce your risks and strengthen your portfolio by selling all or part of that position. Or, conversely, if you’ve been holding a lump of cash looking for an stock market entry point, now may be the time.

If, on the other hand, you’ve begun to seriously question your course, think of current conditions as a stress test. Is the risk tolerance you thought you had holding up for you, for real?

Ask yourself objectively: Can I tough out the fears I’m feeling right now? If so, we encourage you to stick with your existing investment allocations despite the angst.

What if you decide your portfolio is no longer appropriate for you? If that’s the case, let’s get together promptly to plan your next steps. Above all, your wealth should be structured to enhance your personal well-being. If that’s not what’s happening, we welcome the opportunity to help you adjust your portfolio accordingly.

Another question often asked during market extremes goes something like this: I’m okay with my portfolio mix, but why not get out of the markets temporarily until the worst is over?

Whether we leave your portfolio as is, or help you permanently reduce some of its risk exposure, we will never recommend trying to accurately time when to cleverly get out of, and safely jump back into, volatile markets. While nobody knows exactly when a recovery will occur, history has informed us of what typically happens when it does. This recent Wall Street Journal piece explains, using the bull market that began back in 2009 as an illustration (emphasis ours):

A surprising share of a new bull market’s returns pile up in its very early stages when people are most fearful. Take the one that ended last month. Putting $100,000 into an S&P 500 index fund on the day the bull began on March 9, 2009 and selling at last month’s peak would have seen that turn into $630,000 including dividends. Waiting just three months to make sure it wasn’t yet another head fake would have earned you only $450,000.”

In other words, while most of us are still assuming there’s no hope in sight, the markets can quietly and often dramatically make their big come-back … at least for those who have kept a portion of their wealth invested in them.

As always, without the ability to see what is only apparent in hindsight, we encourage you to focus instead on that which we can control. Right now, that is mostly doing all you can to keep yourself and your loved ones out of harm’s way. Please let us know how we can help.


Excel Financial, LLC

Excel Financial is registered as an investment advisor with the United States Securities and Exchange Commission (SEC), and only transacts business in those states in which it is properly notice filed or in which it qualifies for an exemption or exclusion from notice filing requirements. Nothing in this material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.

All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. The information contained herein has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.