by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management
Markets crashed from October of 2007 to March of 2009. Since then, it has been a great ride to record highs. The Dow has skyrocketed and the S&P 500 recently crossed 3,000. The big question is, how long can this thrill ride last?
Bull markets are fun, especially when they last ten years or more like this current one. Such markets build public confidence and increase account values. However, everyone knows that markets are cyclical—our world is governed by certain rules, such as “what goes up, must come down.” So, the question that remains is not if, but when it will drop?
If I knew that answer, I might not be writing this little missive, but rather floating in the Mediterranean somewhere or maybe fly-fishing in a remote and untouched paradise.
I can tell you there are a few things that make me nervous about today’s financial landscape, and the events that surround these things started a long time ago. To be brief, the dollar has not been tied to the gold standard (or any official standard at all) since 1971, financial derivatives are in full swing and mask the extreme over-leveraging of dollars, the Fed has printed trillions of dollars since 2008, and we haven’t yet seen the type of inflation one would expect after this type of increase in the money supply. There is also Brexit and the shaky ground on which numerous world currencies kneel, as well as geopolitical unrest, inverted yield curves, the Fed’s fear of deflation, the roll up of debt to Central Banks and the IMF, and the list goes on.
What’s my point? As basic as it sounds, I believe this is a great time to review your asset allocation models and the diversification within your portfolios. This doesn’t mean diversifying just amongst sectors, but amongst the types of assets you own such as hard assets and physical gold and silver. I believe they could serve as strong hedges in the years to come.
Here is what I promise: The tides will turn and when they do, you will want to know where you stand. You will want to be able to wade it out.
See you all next month.
Jac Arbour, CFP®, ChFC®
Jac Arbour is the President of J.M. Arbour Wealth Management. He can be reached at 207-248-6767.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.