Letter to Our Clients - March 2015

March, 2015

Dear Clients and Friends:

6 years ago, on March 10, 2009, the Dow Jones Industrial Average* (the “Dow”) opened at 6,547, its lowest level since April, 1997.  From March 10, 2009, the US stock market began its rebound to today’s near-record highs.

In 2009 it was difficult for clients to see the benefit of owning MORE stocks.  It was even difficult for many clients to see the benefit of owning ANY stocks, since all the “experts” in March 2009 were clear that the markets would go lower and the world economies were falling apart.

You hopefully will remember that we have encouraged clients to stay with their investment strategy unless there was a change in their individual lives.  If a client settled on an investment allocation of 60%, or 80%, or 98% in stocks at a given point, then we encouraged people not to change their strategy just because the market was going up, or down, or just because they thought it would go up or down.

Since March 10, 2009, the markets have gone up, and up, and up.  Now many investors believe that their investment accounts are not delivering to them market returns.  Some are looking to become more aggressive in their stock market holdings.  There was an article in the March 10, 2015, edition of the Wall Street Journal (Page C 1, picture and all) about this exact issue.

There is an expression that, if you want more return, you have to take more risk.  This expression ignores the reality that the only thing you are guaranteed to get with more risk is … more risk.  More risk does not always generate more return.  Too much risk may deliver a desired outcome for one or more years, but the unexpected can undo a decade’s worth of performance in a week, a month, or a year.**

At the moment the US stock market is at all-time highs.  There is more risk now than there was in 2009.  If you are anxious for more opportunity – or less – please contact us so that we can work together to determine an appropriate level of risk for you in the near-term and in the long-term.  We should also talk about how diversification and balance can help balance risk and reward.

Thanks again for the opportunity to work with you.  We look forward to talking with you again. 

Best Wishes,

Robert K. Haley, JD, CFP®, AIF®                   Theodore R. Haley, CFP®, AIF®
President                                                    Vice President

*All indices, including the Dow Jones Industrial Average, are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.

** Looking at prices as listed on Yahoo, it appears that the Dow peaked at 11,316 on September 7, 2000, and at 14,164 on October 9, 2007.  That means that 8 ½ years after September 7, 2000, the Dow index was approximately 42% lower than at the beginning of the decade.  It also means that from October 9, 2007, to March 9, 2009, a span of 17 months, the index dropped over 50%.  On the other hand, the Dow hit 18,000 earlier this year.  That was a gain of over 11,000 from March 9, 2009, greater than the cumulative gain of the Dow from inception in the late 1800’s to its high in 2000.   Please do not think you can accurately predict future performance!