Stock Market Dog Days
This is the time of year we call the “Dog Days of Summer.” It’s said that expression comes from the Romans who associated the hottest and most humid summer days with the brightest and hottest star, Sirius. Those who live in hot and humid climates know exactly what the “dog days of summer” feel like. Those of us who live in the mountains of Santa Fe recognize the “dog days” by an increase in the number of magnificent hummingbirds, beautiful butterflies, and irritating flies. Regardless of the regional indicators of August’s dog days, the message is the same, “here comes autumn, batten down the hatches, and prepare for the winter.”
In today’s New York Times, there are a couple of articles focusing on the near historic longevity of the current bull market. During every bull market, there’s usually some point when pundits and investors begin speculating on whether or not we’re in the dog days of the market cycle. Everyone who’s anyone, and a lot of people who are everyday investors, want to know if “it’s time,” which is code for “is it time to get out of the stock market?” All of the talking heads want to be the person who calls the top end of this bull market, because with that crown comes incredible inflows of investor dollars into his or her firm that remain invested at least until he or she fails to predict the market bottom.
Those of you who work with investors know that what you do isn’t a game. While experts on TV are trying to predict the future, you’re trying to make sure your clients have a future by keeping them focused on achieving their goals and remaining invested when the proverbial “doggie do” hits the fan.
Cycles are a fact of life, we experience them every day: the sun, the moon, the tides, the weather, and the seasons are all cyclical. Our lives are dictated by cycles. Yet the thought of the investment markets having cycles is more frightening to investors than the thought of a new Jamie Lee Curtis horror movie. Somehow we haven’t learned that if cycles in nature are both inevitable and beneficial in terms of crop growth and productivity, they must also be inevitable and beneficial when it comes to the investment markets and investment portfolios.
New clients are critical to the health and well-being of a thriving financial advisory practice. But bringing in new clients won’t make a difference if you can’t retain the clients you already have. Even the guys in the plate-spinning act on the Ed Sullivan show knew that the key to being asked back was not whether or not they could bring new plates into the routine, it was whether or not they could bring in new plates without dropping the plates they were already spinning.
As clients become more suspicious that this bull market is running out steam, their level of anxiety will increase dramatically. After all, the last correction they experienced felt more like the end of the market than a mere market correction. Knowing that there will be stock market dog days and keeping your existing plates spinning is the most important and the most difficult part of your job. So, over the next few weeks give your clients a call to discuss their investment portfolios, the current bull market, the benefits of market cyclicality, and the direct correlation between remaining invested and achieving financial goals.
This material is for investment professional use only.