Tim Tremblay
Editor’s note: Today marks the debut of a new investments column by Tim Tremblay of Santa Barbara-based Tremblay Financial Services (www.tremblayfinancial.com).
I have been in the financial services business since 1983. It has been an amazing journey.
The 30-year treasury was paying 19.1% in the early ’80s, Home mortgages were in the high teens.
In the early 1980s, the Dow Jones Industrial average had just passed the 1,000 point barrier.
In November 2021, the Dow closed at a record high of 36,327!
The U.S. markets have weathered some very difficult storms over the past 40 years on their way to our recent highs. We had “Black Monday” on Oct. 19, 1987, where an unexpected, severe global stock market crash took place. The markets fell more than 20% that day.
The Milken-Boesky junk bond fiasco took place in the late 1980s, sending the markets down during a period of financial uncertainty. The savings and loan business was abolished in 1995 amid a serious financial crisis.
Sept. 11, 2001 saw the single worst terrorist attack on the United States. The financial markets were in disarray with Wall Street and our economy shut down for days. The markets lost half their value by 2003 with wars in Iraq and Afghanistan.
2008 brought the Great Recession. In a year’s time the markets dropped by 60%.
The markets and the economy have been resilient over the past four decades. In many ways we have a stronger and a more diverse economy as a result. The free enterprise system works.
Prudent advice during those difficult times was “stay the course!” The U.S. economy made it through crisis after crisis with thoughtful planning and good old fashioned hard work. And we will do it again!
We have headwinds in front of us as we move forward. Inflation continues to be a big concern for the U.S. and global economy.
As world leaders strive for an elimination of fossil fuels, there is a heavy price to pay. The oil industry’s financial repercussions are not just the result of the “price at the pump.” Oil affects all aspects of the U.S. economy. The rubber and tire industry, the medical industry, the plastics industry, the asphalt industry and the delivery of our goods and services are all derivatives of the oil industry.
Oil is the biggest single factor with the inflation we are now experiencing. Our politicians and country must come together and establish a comprehensive plan to gradually move to a “green” economy.
Diversification is critical during times of uncertainty and volatility. Investors should consider implementing different asset classes in their investment portfolios. A foundation of “safe money” is important. “Non correlated” assets should be a part of the mix.
These investments are not traded in the stock market and may pay regular distributions. A portfolio of individual securities in a separately managed account should be a part of the plan. During the “growth mode,” the distributions from the non-correlated assets should “dollar-cost-average” into the managed account. When the time comes for income, the portfolio can seamlessly go from “growth” to “income.”
Volatility and uncertainty are guarantees in life, along with death and taxes. It is more important now than ever to continue to do the proper planning, updating and review of that plan to ensure your retirement goals and objectives are met — regardless of what this economy may bring.
Stay the course!
