UPDATE 9.19.23: Have you thought about preparing for a Black Swan event since you read this piece I posted on August 3? Since then, the world has only gotten riskier. As readers of my monthly RAGE Gauge (sign up for my monthly alert here) know, risk is high. Africa has been threatening to break out into a multinational war, now Armenia and Azerbaijan are near to fighting, and nothing seems resolved in Ukraine. Wars aren’t the only Black Swan events, but they certainly increase risk in the world. If you aren’t preparing already, now is a great time to start.
In my conversations with you, we talk about the markets. We talk about prices. We talk about how your portfolio is aligned. We talk about when the next Black Swan will swoop in because it always does—just never on anyone’s schedule.
As Your Survival Guy, my goal is to craft investment plans that may handle the hardest of times. Investors know about the Great Depression and other horrible markets, but they don’t always invest as if they do. There’s often an “it won’t happen to me” or “you only live once” attitude. I’m here to say it can happen, and one should prepare as if it will.
The very nature of owning a diversified, balanced portfolio is that a portion of your money will be in areas that are different. It means, for example, that in tough times bonds, being higher up in the capital structure compared to common equity, should offer more comfort. And even if their prices move in synch, the counterintuitive nature of buying at lower prices is easier to do when you’re reinvesting dividends or buying more bonds with cash.
When investors cheer, I jeer. I know big-time losses are life-changing events. They may not happen regularly. They often aren’t foreseen. They just happen. My goal is to be ready for when they do. To be comfortable no matter what’s going on in the world. As a fiduciary, I’ve lived through plenty of volatility already this century and know how hard it is.
Action Line: Stick with me. When you’re ready to talk, let me know.
Originally posted August 3, 2023.
E.J. Smith - Your Survival Guy
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