WHITE STREET ADVISORS

Are We There Yet?

There are plenty of reasons for the sell off; no need to talk more here on what is already well publicized.

The real question, instead of Are we there yet; has the market finally hit bottom?, should be  How is this sell off affecting you ?. Do you, or did you, have a strategy in place that makes the most of your situation today and your dreams and goals tomorrow?

It is both tragic and infuriating to hear about retirees or soon-to-be retirees that have been devastated financially and emotionally because they did not have their money in the right places; the stock market and real estate market is no place for money designed to deliver a stream of reliable income without at least a 7 to 10 year time horizon; in other words, dont rely on distributions from a stock or real estate portfolio to fund your daily living. Dramatic series of events playing out as if someone tipped an elaborate  maze of dominoes set end to end occur every so often; though we never really know when they will occur, we should know that they do and we should prepare for them.

The best way to fix all this is to buy through this down market if you can. Interestingly, I had a very enjoyable evening last week attending a talk by Lauren Templeton. Lauren is the grand niece of Sir John Templeton, arguably one of the best investors of all time and the father of a globally oriented investment strategy. She is the founder and president of Lauren Templeton Capital Management, LLC. an alternative investment management firm located in Chattanooga. TN. And she is a delightful speaker.

What Lauren talked about was the fact that we need to be less fearful today. Without ignoring any of the realities of the economic conditions and problems facing us, she offered an optimistic view of the futurethat there will be one, that the markets will recover, and that the best time to buy is when pessimism is at a maximum. This is the very heart of Sir Johns philosophy on value investing, and over long periods of time, value investing has proven to be an excellent investment strategy.

If you have gotten out of the market because of fear or luck, just when do you get back in? Its a tricky businessno one knows for sure when the bottom will occur or just how low a market will fall. And, even though there may appear to be some pattern from past markets that can be used to figure out this one, judging the near future profitably next to impossible. So, as difficult emotionally as it is likely to be and probably not having a good relationship with the physic up the street to bolster your confidence, I suggest to you that now is a pretty good time to get back in the market. Because you have to be in the market to enjoy the eventual rebound. And enjoy is the right word here because market rebounds tend to be quick and dramatic; missing one is costly.

Look at the following chart, put together by Lauren and her staff at Maximum Pessimism. It shows 1, 3, and 6 month returns from the nine past bear markets since 1957. Imagine yourself at each of those market bottoms; youre out of the market and youre wondering just when to get back indo you make the right decision? After all, there are fits and starts to any reboundhow can you be sure this is the right time?