Navigating Financial Markets in Global Crises | Erik Averill, Brandon Averill | AWM Insights #1

Episode Notes

Welcome to our new bonus series: AWM Insights! In these mini episodes, we will hear from the AWM team on different topics and resources relevant to our community in 5-7 minute episodes. 

For our first episode, there is an easy segue with the news of the Covid-19 virus and its impact on global markets. This has been a concern from a human level and a health level - however, our strategy remains the same as it relates to navigating the fluctuating markets. Listen in for more from two of our founders, Erik and Brandon.

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Erik Averill (00:00):
Hey everyone. Welcome to this first edition of AWM insights. I am Erik Averill and I'm joined by my cohost and the co founder of AWM Brandon Averill. And a big initiative for us in 2020 is all about leaning into communication. This is such a big initiative for us that we have actually hired two internal employees to be helping with us to make sure that we are continuing to add value and be in great communication with our entire community. And so a really easy, uh, segue into the news to talk about this. First one. Obviously there's a lot going in the world and a lot of, uh, uneasiness if we're watching the news. And so we wanted to be proactive in our communication with you. First and foremost. Uh, we personally are all concerned from a human side of the impact of the Corona virus and the uncertainty around it. But we also know that so many of you listening and trust us to lead you through this from a financial perspective. And so Brandon, I wanted to just ask you to lean into a little bit of what is the impact of the Corona violet virus or this house scare when it comes to investment portfolios?

Brandon Averill (01:11):
Yeah, Eric, I mean, uh, as you said, we're definitely concerned from a human level of health level. Uh, but as we look at portfolios specifically and the stock markets around the world, the good news and all this is, this isn't the first crisis that we've run across. Uh, the world's observed many previous crisis. He's, and the one thing that we've learned is that, you know, the stock markets, the capital markets have rewarded discipline investors over time. Uh, one of the analogies I heard, uh, from one of our investment partners was that of a rollercoaster. Rollercoasters might be scary at times. Um, you know, we're going to go through the ups and downs and, and there are going to be drops that come around the corner when you're leasing, at least expecting them. And I think that's a good analogy for what we're going through right now is we're, we're going through one of those drops.

Brandon Averill (02:03):
But if you think about a roller coaster, it has a plan. It has a place to stop at the end. And the one thing we know about roller coasters is the absolute worst thing you could do is get off the ride. Uh, while the car is still moving, put your hands up, stick them outside of the car. Uh, that's only going to cause negative repercussions. So, you know, you want to dial in your capacity for what kind of roller coaster you can experience. But we do know that if you're willing to go through some periods, like this history tells us that you're going to have a greater investment outcome at the end. So if you're willing to ride the great dipper, you're gonna at the end of the day probably have a little more exciting ride. Uh, there are going to be moments that are scary, but if you stick on and you stick to that plan, it's, it's going to be a good outcome, you know?

Brandon Averill (02:49):
But for some investors, you're not willing to do that. So you need to take the kiddie coaster and yeah, we're not willing to go through some of those, those downturns and we're, you know, willing accept a little bit less of a ride. But, um, but I feel like that's a good analogy for what we're going going through right now. Um, you know, if, if you're really reacting to this crisis and leaving the market, uh, really what you're doing is another form of market timing. And we all know that doesn't work. Uh, historically all the evidence has supported that, uh, moving in or out of the market in response to an event or trying to predict when the market is going to have a positive or negative return. There's just too many decisions that have to be made. Uh, we know that public markets are, are so efficient that that information flows far too quickly for anybody to have a leg up on one another.

Brandon Averill (03:42):
So, you know, what we're really falling back to is the plan that we've put in place for clients. Uh, we provide things that provides a lot of safety for everybody. Um, and, you know, really lean into that proper diversification, prudent investment management and being goals driven with our asset allocation. And I think all of our clients know that's really what we try to do is control what we can control. Uh, that doesn't mean doing nothing. You know, we're in a period right now where we do see, you know, can take advantage of these downturns slightly through some of the tax moves, uh, specifically tax loss harvesting. And our clients are pretty familiar with this, but, uh, it is an opportunity to take, uh, some tax losses and reallocate, uh, maintaining our exposure to where our, we want our portfolios to be. Um, but then also strategic rebalancing.

Brandon Averill (04:35):
So as the equity stock ownership markets have declined, uh, taking some chips from the, the bond side, the safety side of our portfolios and reallocating them, uh, as allowed us to help enhance that wealth effect. So, uh, I think it all boils back down to the plan here. Portfolios, uh, on our side are very much built to withstand crisis. These events that we're going through right now. We saw this and you know, the late nineties with the.com bubble burst. Uh, we saw it with, uh, with September 11, 2001, we saw the 2008 great financial crisis. Uh, this is how markets work and, and we just want to continue to educate people to stick to the plan because that's going to give you the greatest, uh, financial outcome over time. Erik Averill (05:25): Thanks Brendan. That was great. And just for the listeners, I think as we sign off is as we know, whether this is on the field, in the boardroom or in your investments, it is focus on what you can control and trust the process, trust the plan, and until next time, own your wealth and we'll talk to you soon.

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