“Someone's sitting in the shade today because someone

planted a tree a long time ago.” - Warren Buffett

 

When significant change, turmoil or uncertainty occurs, it’s human nature to want to “do something”. If you have a robust process, often you personally have done most of the work already to control what you can control and doing less can actually be the best thing for you. Now is the time to let the proven Eydt Wealth Management process cultivate “The Tree” for tomorrow.

 

We've spent hours with our clients over the years, understanding and formalizing their Vision document to prioritize what’s important to them. From their Vision, we update their financial projections using conservative assumptions to ensure they can fund their goals, bringing clarity and perspective to their financial position. Lastly, we’ve built and adjusted the investment plan so the portfolio is appropriately allocated for their cash flow and security needs. Over the last year, on the macro level we’ve been ratcheting down the risk in the portfolio, taking profits from the equity markets and reallocating to more secure parts of the portfolio. On the micro level, our portfolio managers also reallocated some of the profits (specifically in the highly valued US tech sector) and reallocated to other parts of the world where companies are undervalued. We can’t completely eliminate the downside during times like this, but we can buffer it significantly, like we have in the first quarter of this year and through many other volatile periods in the past.

 

We don’t know what’s going to happen in the short-term regarding Trump’s geo-political or trade policies but we have done a lot of work to position our clients well to reduce the overall volatility we’re seeing. Doing more at this point could reduce the upside that is likely on the other side of this uncertainty. History has shown that there is usually a tremendous growth/recovery phase after uncertainty and it typically happens much sooner and faster than anyone expects.

 

“History does not repeat itself, but it often rhymes” – Mark Twain

 

Through history, we've experience many events that have impacted the markets significantly in the short-term.  Each event is unique and you hear the phrase "it's different this time".  Some of these events are financial or economical in nature, others are geopolitical and some are health related like the pandemic.  What IS common is how the market reacts.  Typically the market overreacts and has a brisk and significant decline, then after several months of turmoil, rebounds almost as quickly as it declined and well before anyone expected it to.   On average, after about a year or so, the market has surpassed the previous high, starting the next growth phase.   The above graph is a great illustration showing major global events and how quickly the market has recovered and grown over the long-term.