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Sep 16, 2008 1:56 pm

Ok, so if I was a little confused a couple weeks ago, now I'm officially confused. 


I know it's crazy, but when would you consider moving to more bonds or cash? 


I don't want to try to time anything, but it's tough to see accounts that are supposed to be moderately invested keep going down and down and down.

Sep 16, 2008 2:16 pm
snaggletooth:

Ok, so if I was a little confused a couple weeks ago, now I'm officially confused.



I know it's crazy, but when would you consider moving to more bonds or cash?



I don't want to try to time anything, but it's tough to see accounts that are supposed to be moderately invested keep going down and down and down.





Some would say Bonds to Stocks.. It's all about your perspective and your clients risk tolerance.



Miss J

Sep 16, 2008 3:27 pm

The challenge is if you aer already 100% invested.  I would not be moving to bonds now.  I would be doing the opposite if you have a long term view (and you have adequate capital to move in a portfolio).

Sep 16, 2008 4:03 pm

That's my problem...I've already gone all in...

 
J/K, but I did go as high as I ever do with stocks in the last three months.
Sep 16, 2008 5:04 pm
SonnyClips:
snaggletooth:

Ok, so if I was a little confused a couple weeks ago, now I'm officially confused. 



I know it's crazy, but when would you consider moving to more bonds or cash? 



I don't want to try to time anything, but it's tough to see accounts that are supposed to be moderately invested keep going down and down and down.



Snags, stop it! Isn't this the reason you put money into VA's in the first place? Call your clients and remind them that THIS is what you had in mind when you made the recommendation, then get some referrals.

 
It's the money that's not in VA's that I'm worried about.
 
For my clients that are 1-2 years from retiring, I had set aside 2 years worth of cash, mutual funds for the intermediate term, and VA's for years 10+.
 
I'm beginning to question this approach.  The mutual fund portion is down probably 15% YTD. 
Sep 16, 2008 8:31 pm

Snags, you don't know squat.  You didn't know squat a few months ago.  You didn't know squat a year ago.  You won't know squat next year.  The sooner that you realize that you have no clue as to what will happen in the market tomorrow, the better advisor that you will become.  Make sure that your clients also realize that you don't have a clue.  My clients know that I don't know anything.


Ok, so what do you do when you realize that you don't know anything about the future value of investments?  You stop letting outside forces influence your decisions and your recommendations.  The market can always go down 30% tomorrow.   The solution is simply to make sure that long term money is invested in accordance with one's risk tolerance and short term money can withstand anything that the market might throw at them. 


100% of my clients with whole life insurance will have their cash value increase this year.  Why did I mention that?  When someone needs cash, it's important to have an asset that can be tapped that won't be down in value when it's needed.
Sep 16, 2008 8:57 pm

Snags,

With rates at these levels, and stocks 23% off the highs its not time to reallocate to bonds. The hardest thing to do is usually the right thing.
More important than any of this, you need to have a process. For some, its asset allocation, for others its technical analysis, and for others still its Mutual Fund screens. Whatever it is, you need a process that you believe in, and you need to show it to clients and sell it to them over and over again. Once you do that, you will still have a pit in your stomach in times like these, but you;ll always know what to do, and you;ll have buy in from your clients.
You are paid to get the emotion out of the process. Focus on that.
Sep 17, 2008 12:30 am

Gotta agree with Anon, you did have THE conversation about long term with your clients right?

Sep 17, 2008 2:28 am
snaggletooth:
The mutual fund portion is down probably 15% YTD. 



Stop reading the papers and listening to the talking heads.  Stop letting emotional clients affect you.

15% hurts when you dwell on it, but in the grand scheme of things it's a flesh wound.  If they are down that amount in this market, you need to explain to them that you've done a good job in this market....and explain to them what COULD have happened to them if they were overweighted in financials...considering that they were the darlings of the street only 12-18 months ago.

Ok...so you've now been bloodied for the first time.  It hurts.  It sucks.  But you've survived it.  Now suck it up and go help your clients get through this.

Remember...buy low sell high.  Maybe they won't be eager to act tomorrow when you discuss it with them for the first time, but be persistent.  They'll thank you in 5 years.

Sep 17, 2008 11:06 am

The market is off 4% in one day! Run! Run! Run for your lives! What are we going to do! The sky is falling! OMG,OMG,OMG!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


Are you kidding me?
 
Try living through the DOW going from 2722 to 1738 in 2 1/2 months. That's a 36% decline. Or, try going from 2246 to 1738 in one day. That's 22% in one day. That was 1987.
 
I'm not going to downplay the mess we're in today. But relatively speaking, you ain't seen nothin yet!
 
There is orderly trading in the markets and plenty of opportunity. We didn't have that back then. I survived the crash of 87 as did my clients. It wasn't pretty. My office of 45 brokers was shell shocked. Most said they couldn't get clients to do anything, buy or sell. Business fell off at an alarming rate. Some brokers started selling insurance products and limited partnerships. Anything that was outside the stock arena. Anything but stocks.
 
Here's what I did:
 
Teamed with two other like thinking brokers and given our own sales assistant we moved into a large corner office vacated by the a unit of bond dept. We hired two cold callers, bought D&B leads and As well as a D&B Directory. We then hit the phones from 8am to 6pm every day. Our little group opened at least 3 new accounts a day. Opening account size ranged from $15,000 to $500,000. More days than I can count the group opened five to ten accounts in a single day. It was fricken open season on moribund investors out there. We started posting the the new accounts and AUM with a grease pencil on the window between our office and the rest of the office. By the way, our door was always closed. On the other side of that door was the stench of death. Brokers dying a slow death. Meanwhile, on our side of the door production soared. Was it hard to do, Damn hard! But we did it.
 
If i can do that in the face of a 36% decline, never in modern times seen anything like it market, everyone here can do it today.
 
Pull yourself up and get on the phone!