Special Message from Ron Rough

Special Message from Ron Rough

November has proven to be another tumultuous month for the stock market.  In this two-minute video, Ron Rough, FSA’s Director of Portfolio Management, provides some insight into what the market landscape has looked like and how FSA plans to approach the next few weeks.

Transcription:

Hello, this is Ron Rough, director of portfolio management for Financial Services Advisory.  Since our last update in mid-October, stocks have bounced around and really haven’t made any progress up or down since the last update.

If you look at the chart here, you can see that stocks have gone down, back up, and down again, and really are little changed from the levels they were back in mid-October. What’s interesting about this correction, is that we’ve had a 10% correction back in the first quarter and another 10% correction here in the fourth quarter. This is unusual. We get these corrections about once a year or so, so to have two corrections in the span of one year is unusual. It makes for a very difficult environment.

As we head into the end of the year, of course, the question is what next? Stocks typically do well November, December, January. Secondly, the economic numbers are still very strong, so that’s encouraging. What has the market very nervous right now are two things: Trade tariffs with China, and number 2, the Fed has been on this path to increase interest rates.

If there are any positive developments on those two fronts here in the final six weeks of the year, I think you’d see stocks rally on that news. The Fed is meeting in early December. If they just they say anything dovish in that statement, you can see stocks rally.

In our portfolios, we’ve built up a lot of cash. We are less than 50% invested across the board in all of the strategies. If the markets break down from the levels that I just showed on that chart, all of these portfolios would go to cash. In particular, Income and Growth and Conservative Growth would be the first to find themselves all in cash. So, we are ready to do that, and we are monitoring the safety nets on a daily basis to make sure that happens. So, we’ve got you covered if the markets surprise investors and finish weak into the end of the year. Hopefully that won’t happen, but we’re ready to do what we need to do if that does happen.

So, until our next update, Happy Thanksgiving, and happy investing!

Disclosures: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Financial Services Advisory, or any non-investment related content, made reference to directly or indirectly in this newsletter) will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions or applicable laws, the content may no longer be reflective of current opinions or positions.

The FSA Safety Net® is designed to represent an exit point for each security within a portfolio and to help reduce losses from sustained drops in the financial markets. The FSA Safety Net® is not effective and will not protect assets in abrupt/sudden market drops. Examples of such occurrences include, but are not limited to, the market crash of October 1987, the market drop in October 1989, the market disruption caused by the terrorist attacks of September 2001, and the flash crash of May 2010. Similar future occurrences could reduce the effectiveness of the FSA Safety Net®.  In addition, the FSA Safety Net® will not protect assets in the event mutual fund companies, custodial companies, or the securities exchanges themselves, at their discretion, suspend, disallow, or fail to conduct trades, redemptions, or liquidations.

Inverse/Enhanced investments: FSA may utilize inverse (short) mutual funds and/or exchange-traded investments/funds (ETFs) that are designed to perform in an inverse (opposite) relationship to certain market indices (at a rate of one or more times the inverse result of the corresponding index). In addition, FSA may also use leveraged (enhanced) mutual funds or ETFs that provide an enhanced relationship to certain market indices (at a rate of more than one times the actual result of the corresponding index). There can be no assurance that any such investment will prove profitable or successful.  In light of these enhanced risks/rewards, clients may direct FSA, in writing, not to employ any or all such investments.

Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from FSA.

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Please remember that it remains your responsibility to advise FSA, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or  if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.

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