Local Wealth Manager observes the Long Overdue Correction May be Opportunity!

Aug 24, 2015, 21:50 ET from LJPR Financial Advisors

TROY, Mich., Aug. 24, 2015 /PRNewswire/ -- LJPR Financial Advisors was set to release a blog, "Market Cycles Aren't Seven Years", but the last few days have alleviated the necessity of that topic. "We have had seven years without a meaningful market decline of 10%.  That is very unusual.  The market will have the tendency to overreact.  We call them waves of fear and waves of greed.  Warren Buffett calls it the 'broken clock syndrome'.  The market is either slow or fast, and is probably correctly valued once in a while," says Leon LaBrecque, JD, CPA, CFP®, CFA and also the Chief Strategist and founder of LJPR.

"Seven years, coming off of the Great Recession, we've had a nice upward run,"  LaBrecque says. "He goes on to say that many pundits have been predicting corrections or even crashes. "This has been followed by a long series of unsuccessful predictions of rising interest rates, gold soaring, and wide scale collapse," LaBrecque continued.  "In actuality, the seven year run from our perspective was created in part by the unique and artificial historic increase in the money supply.  When the economy tanked, the Fed poured money into the economy, and made interest rates so low that stocks became one of the only viable options.  People reacted by buying stocks."

"So, let's impart some history," says LaBrecque.  "In EVERY year for the past 34 years, there has been a negative point in the year.  In fact, the average of negative points for that 34 year period is -14.4%.  However, in 27 out of 34 of those years, there has been a positive return, averaging 11.1%, according to Morningstar.  Furthermore, it's important to look at the reason for the declines.  Overreaction?  We ask this simple question:  What changed in the last few days?  Is China going out of business?  No.  Is the US economy going to collapse if China doesn't grow at 7.4%? No.  Is $40 a barrel of oil just the start, is oil going to $0? No.  Is the market volatile, because it is driven by human behavior? Yes."

James Duronio, CAIA, CIMA®, AIF®, Investment Manager and Financial Advisor, at LJPR adds, "Trying to successfully time the market is a futile effort and even more pointless in the current environment. What's important to consider going forward, if you are looking at your investments from a long-term strategic perspective, is the outlook for the future.  Not a day or week from now, but over your projected investment time horizon.  Direct your focus toward your plan rather than the day-to-day fluctuations of the portfolio."

LJPR Financial Advisors is a Michigan based company headquartered in Troy.  LJPR is a fee-only independent wealth management firm specializing in individual retirement planning, investment management, executive financial counseling, nonprofit investment services, estate planning and tax planning. For over 26 years the team of professionals has been offering a comprehensive menu of fiduciary services.  LJPR currently has over $715 million in assets under management as of July, 31, 2015.

 

SOURCE LJPR Financial Advisors



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