DANGER WILL ROBINSON! Is a Recession about to strike?
By Mark J. McCandless, CPA, CFP®, MTax
President, Pathfinder Wealth Advisors LLC
In the 1960s television series Lost In Space, my favorite character was the Robot. Whenever the Robot sensed a meteor storm or an unknown presence, he would shout “Danger Will Robinson!” Here is a short clip. An impressionable nine year old, I would play Lost in Space with my friends. I would run through my yard waving my arms and holding my hands in the “hook ‘m horns” position (You know, University of Texas) and yelling “Danger!” like the Robot with his claw hands would. I believe my Mom wondered if she had dropped me on my head as a baby.
Today, some investment firms have started to yell “Danger” that a recession will descend upon us within the next two years. Should we change strategy? What should we do? Rather than run around the halls of our office like the Robot, I thought something else might be more useful for our clients. With some research help from our partners at Dimensional Fund Advisors, we created our Pathfinder report “Pursuing a Better Investment Experience – Ten Recommendations For Dealing with the Noise of Volatile Markets.” One of the most important recommendations is to “Focus on What You Can Control.” This means you can control creating a portfolio that is geared to your risk tolerance, globally diversified, uses funds or other investments with lower expenses than most funds, has lower turnover and is sensitive to the impact of income taxes. You can do this yourself or with the help of an investment advisor.
We tell our clients that the purpose of this is to remind all of us what we should and should not do in order to have an opportunity for success in investing. Will we have a recession? Of course. When will we have a recession? No one knows. Not even the Robot. The key is to be patient, avoid loud promoters that promise unrealistic results, communicate with us, and let us do the necessary rebalancing that will adjust the portfolio due to market changes. The worst investment returns were incurred by those that sold out during the last significant downturn. Investors that rebalanced to their target allocation and were patient achieved outstanding returns.
In the heat of a market downturn that feels like a meteor storm, when even the Robot can only yell “Danger” but can’t tell you what to do, remember the recommendations for Pursuing a Better Investment Experience. If you would like a copy of all of the recommendations, please send an e mail to me at firstname.lastname@example.org and include “Ten Recommendations” in the subject line.
More advice from Mark McCandless: Generating Tax Savings and Retirement Savings With SEP-IRA
Mark J. McCandless, CPA, CFP®, MTax, President
Pathfinder Wealth Advisors, LLC
6100 Oak Tree Blvd. Suite 200, Independence, Ohio 44131
"Dedicated to our clients and their success"
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