#6 Move, Complimentary Marketing Call and Group Life

7 Moves to Make in 2024: #6 Assess Your Risk Tolerance

For those of us who were investors in 2008, we know that stock market downturns can be very ugly, grueling and seem much longer when you are going through it. The S&P 500, which measures large cap stock performance, drew down about 50% in 2008. From 2009 to 2021, the U.S. stock market had an unprecedented growth cycle. Many investors became very relaxed in their risk management strategies. In 2017, the stock market recorded a new high every month. Fear of missing out on gains caused moderate investors to drift into aggressive portfolios, and aggressive investors to throw all caution to the wind. 

2022 was a rough year to be a stock investor. Not nearly as bad as 2008, but certainly uncomfortable as the stock market fell 23% from December 2021 to October 2022. Presently the market has recovered from the most recent low. The time to make changes to your portfolio is not in a down market, it’s in a rising market (sell high / buy low). The decade-plus-long bull or rising market that we experienced from 2009 to 2021 is not typical. We shouldn’t expect to see something like that for a long time. It was a perfect storm of depressed asset values from 2008 and historically low interest rates which encouraged expansion in business, investment and consumer consumption. Stocks and real estate were the leading investments. Bonds with historically low yields were difficult for many people to hold because they were watching their stock portfolio climb by double digits nearly every year. While we expect stocks to continue to perform over the long-term, which we define as 10 or more years, we also think there are other asset classes that will likely strengthen a portfolio over the next decade. Multiple, non-correlated asset classes can add stability to an investment portfolio. We call this concept diversification.  

The percentage of stock exposure that you have in your portfolio will likely determine your long-term growth rate, as well as the drawdown you experience in a falling market. A portfolio that is 50% US stock is expected to experience about half of the downturn of a portfolio that consists of 100% stocks. A portfolio that consists of 30% US stocks would expect to display only about ⅓ of the stock market drawdown. You can determine the ride that you experience along the way by how you allocate your investment portfolio. In essence you select a level of risk that is appropriate of your tolerance and build a portfolio to match that. Money managers refer to this as the efficient frontier. The maximum return per unit of risk. 

At all times, you should be aware of your “value at risk.” What is value at risk? Your advisor should be able to show you what your expected short-term loss would be, with levels of confidence, if we were to enter a recession or severe stock market decline. If you control the downside, the upside of your investment portfolio will take care of itself.

Commercial Clients Receive Complimentary Marketing Review

Whenever a businessowner asks me what they can be doing to grow more efficiently, my first response is "When was the last time you have spoken with Carly?" Carly Snyder heads CAG Marketing, which is the second arm of our client service offerings. All of our commercial clients receive a complementary consultation that is sure to be packed with revenue-generating ideas. Contact or office to set up a free, complimentary call. You can also reach out to Carly directly by emailing her at csnyder@crosbyadvisory.com or by visiting marketingcag.com.

Small benefits can go a long way in keeping quality employees.

Attracting and keeping good employees is a constant challenge for small businesses. One of the most overlooked benefits that can be provided is group life insurance. Costs are extremely affordable and can be structured to be paid by either the employee or employer. Erie Insurance has a niche program which can lock in employee rates for 20 years. Not everyone is required to participate. If you are your business's only employee, you can still qualify for group rates.

For questions about:

Investing and Planning: Nate Crosby or Derek Ballinger

Marketing and Business Growth: Carly Snyder

Home, auto or Commercial Insurance: Julie Maglott

Life Insurance: Macy Vogel

Disclaimer: This newsletter is for informational purposes and does not represent direct individual advice. Crosby Advisory Group, LLC provides financial planning, marketing and insurance services. Crosby Advisory Group, LLC is a registered investment advisor. Investing involves risk including the potential loss of principal.