Investment Guy

Michael Vick just got a second chance to play in the NFL.  As a dog owner I am disgusted, and as an Eagles fan I am embarassed.  It’s not because I don’t believe in second chances…Vick did his time, and he is out of prison.  He is a free man- free to get a job, enjoy the outdoors, and even work for the humane society to do all the good he can.  However, to be working in the NFL again with a $million+ contract seems like a lot more than a second chance.  To me it seems like he is right back where he was before prison, albeit out a few million dollars.  Both the Eagles’ and Vick’s crisis management team can spin it all they want, to me it is wrong, and all the talking points I’ve heard sound a little too much like talking points.   

But the idea of a second chance is something we have been talking about with our clients a lot lately.  The markets devastated many account values.  If you truly wish that you had sold everything well before the market bottomed, well, now the markets are up some 50% from their lows.  Here is your second chance. 

This is not recommendation to sell everything- I want to be clear.  This is advice regarding your investor profile.  Take a minute, and re-evaluate your risk tolerance and your time horizons.  Do it today.  Think about what the last 18 months has taught you, and what your portfolio needs to do for you.  If you were not able to sleep some nights because of your investments, you need to address this.  You need to think about your goals.  Think about how you will feel if the market sells off again.  There is no doubt that your investments are still down from the market’s highs, as being down 50% requires 100% gains to get back to even.  It’s just the way the math works.  But you need to think about today going forward.  This is your second chance to sell when the markets were down 25%. 

Remember- we were entering a depression, credit markets were freezing up, the consumer had stopped spending,  unemployment began to skyrocket and homes were being foreclosed on faster than anyone can remember.  There was no end in sight.  Were you shell-shocked as markets dropped 10, 20,30% from their 2007 highs?  At the end of 2008, markets stood -35% (approx).  Before anybody could digest that, the markets were down another 25% in 1Q2009.   The market finally bottomed on March 9th, down 57% from the October 12, 2007 high- YIKES!

And suddenly, miraculously, to everyones surprise, the markets bounced on March 9th, 2009.  Boy did the markets bounce…up 10, 20, 30..  As of last Friday, August 14, the markets were up 50% off of the lows.  Everyone who was thinking about giving up on investing and selling out everything, going 100% to cash but instead held on – has been given a second chance.