Make sure your financial advisor and their firm accurately reflect your risk tolerance. With recent volatility and an 800 point market drop in the immediate aftermath of Brexit, just a few weeks later and it looks like nothing but a blip on the radar screen. Since the Brexit vote results were announced, we saw an approximate 800 pt. decline in the DOW, followed by an immediate rebound over the following weeks. At the same time, the yield on the 10-Year Treasury Note has reached historic lows, and as of July 13, 2016, the DOW and S&P 500 have both reached historic highs. Nations like Japan, Sweden and now Germany are fetching negative yields that’s right, you have to pay these nations to let them borrow your money, and many are predicting a recession for Britain as well as the EU.
So while many are reviewing their monthly account statements in the mail or online on their handy-dandy smartphones and tablets, are they truly comfortable with this market, and does their advisor and their firm truly know their risk tolerance Whether you’re a novice investor or well into retirement, chances are you (and your financial advisor) have never experienced an equity or fixed income market with this much volatility. You fixed income investors have probably already been stung by the oil, energy and gas sector meltdown, or you have found Puerto Rico municipal bonds or funds in your accounts which may be causing you additional angst.
Given the global nature of markets, with so many moving and interrelated parts, it’s really unclear where we go from here. Many market forecasters and pundits paint a picture that investors (those that favor equities or fixed income) may be slowly reaching the top of that roller coaster, and the free-fall may be coming. For example, James Mackintosh wrote an article that appeared in the Wall Street Journal this morning (July 14, 2016), titled The Bull Is on Its Last Legs, suggesting that there is a bond bubble that may soon burst. Prior to that, the Wall Street Journal has recently published articles suggesting that the US domestic utility markets may also potentially be on the verge of a bubble, and that is referring to a sector that has been widely regarded in the past as a safe haven in the face of market volatility. We’ve already seen a big decline and a string of bankruptcy filings in the oil and gas industries, and also in coal and throughout the energy sector.
If you’re not comfortable with what lies ahead, develop a plan and speak with your financial advisor, and be sure that your account records accurately reflects your true risk tolerance. Understand that a financial advisor’s recommendation to hold, or just stay the course, etc. is still investment advice, and it can constitute a recommendation. You should be aware of the legal and regulatory landscape that actually governs your financial advisor’s conduct in other words, are they salespeople required to make suitable recommendations, or are they held to a higher fiduciary standard where they are actually required to place your interests ahead of their own and their firm’s interests Financial advisors, when rendering investment advice, need to consider your age, investment experience, financial situation, investment objectives, tax status, time horizon and risk tolerance. If you’re getting the stay the course, don’t worry routine, but you are uncomfortable, you need to ask yourself whether your financial advisor is really placing your best interests ahead of their own (or their firm’s interests) and make certain they are taking all of these items to heart when making any recommendations to you. This market is likely to turn at some point the cycle will change in the other direction, and the tide will go out. In the words of Warren Buffett, you only know who is swimming without pants when the tide goes out.
We are here for you, the investor. If you have experienced investment losses and would like to schedule a free consultation with the Investment Litigation team, we are here to help you, the investor. If you have experienced losses (realized or unrealized) in your investment accounts and you would like to discuss your concerns in more detail with an experienced attorney, contact us today at firstname.lastname@example.org or visit our website at Investment-Litigation.com to learn more and call us to schedule a free case evaluation. We do not earn a fee unless we obtain a financial recovery for you.