Scary Investment Trends; Fear or Greed?

Scary Investing Trends

With Halloween fast approaching, I'm seeing some very creative decorations around the neighborhood. Ghosts, tombstones with morbid etchings, and the like.



I am also seeing and want to report to you, some disturbing investment trends that are sure to scare some investors into making some bad money decisions. 

One trend in the works since the 2007-2008 market crash is stock ownership. The percentage of household that own stock has fallen from 65% to 55% in the last 10 years. 

Looking at the various age groups in the study, every age range except age 65+ saw a decline in stock ownership. And remember, we're had a very good bull market in stocks for 9 years now - after the bear market ended in March 2009! 



Why is that? Well, the reasons are many no doubt, but that last recession and bear market (2007-2009) cut deep into the psyche of many investors, many of whom lived through the 2000-2001 market meltdown also. As an example, if you were born in the mid-to-late 1970's and started your career and investing at age 25, in or near 2000, you experienced the "lost decade" from 2000-2010 when stocks were essentially flat; no gain or loss. Then you may have dipped you toe in the water in 2011 or 2012 and saw some nice gains from there. Fear of loss was stronger than your fear of missing out. 

Then a few years earlier, in 2005-2006, the real estate downturn started, and your biggest asset - your home - plummeted in value (unless you were prescient to sell at the top). 

No generation has been exempt from bear markets, where stocks fall sharply after bull markets end. That real estate bear market had never occurred before to that extent.

I will include real estate in this, and say that the 'lost generation of investors' includes those who owned stocks and real estate, since both suffered severe bear markets during that 10 year span. 

Looking really far back, to the Great Depression of the 1930's - research shows that adults who lived through that - they would be your grandparents or great-grandparents age-wise were 1/2 less likely to invest in stocks the rest of their lifetimes; just an average 13% ownership in stocks. 

That was the case for my grandparents, and I evidenced that first hand how they gravitated toward bank CD's, Government Bonds, and F.D.I.C. insured deposit accounts. 


Fidelity Investments dug in to their client accounts and unearthed what I find to be spooky trends that are in place right now.

 47% of Fidelity's 19.7 million retail brokerage accounts are invested in aggressive portfolios, defined as those containing 85% of more in equities (stocks). Huh? 85%? Maybe they have their bonds, cash and Gold assets parked with other brokerages or banks. Hmmm, not likely. 85% is okay if you are 25-35 years old, with 25-35 years until retirement, but not for many or all. As Clint Eastwood growled out in his 1973 Magnum Force movie, "A man's got to know his limitations".

On the brighter side, Fidelity also reported that one-half (50%) of their client's 401-k monies were invested in target date funds. Those are mutual funds and others that invest in stocks and bonds, but decrease your stock market exposure, and increase your fixed income (bond) holdings as you age, thus lessening the volatility of your money when you retire. That's a rather smart strategy if you don't want to hire a manager, or don't have the time or energy to do it yourself. To me, this show a reversal of the quip from above, in that investors are now more fearful of missing out vs. the fear of loss. 

Believe me, the fear of loss will rear its ugly head again. You could make an argument that it's begun already, with the popular stock market averages (Dow, S&P, Nasdaq) down 8%, 9% and 11% from their September highs as of today's closing quotes.

Bonds have been held back and have not countered the fall in stock prices. Gold has gained 4% since stocks peaked last month.



Be careful out there, watch the charts, and have a plan in place that's rules based, not emotional-based.






Important Deadline for V.A. Benefits Next Week

Dear Clients and Friends -  Please read this time sensitive news for potential benefit. 

I wanted to reach out to you today and let you know about some changes in VA Pension regulations that may impact some of the veterans or spouses of veterans that you know. 

Effective Thursday, October 18, 2018, the VA Pension program will be implementing a 3-year look-back period where all asset transfers will be closely evaluated by the VA.

If the VA believes that the veteran or spouse transferred assets for the sole purpose of qualifying financially for pension benefits, the VA may impose up to a 5-year penalty on the veteran that would block the veteran from receiving the necessary pension benefits.

Additionally, the VA has made some modifications to their definition of “net worth” for Pension program purposes and this may impact some veterans and put them over the financial limit to qualify for pension benefits. 

Any asset transfers that are undertaken prior to October 18, 2018, will NOT be subject to the 3-year look-back period.

So, if you know of veterans or spouses of veterans that may be needing VA pension benefits or Aid and Attendance benefits in the immediate future generally used to cover the cost of nursing home-level care, I would love to talk to them and see if there are any changes needed to their financial planning strategies so they can potentially qualify for VA pension benefits.

Any asset transfers that are undertaken on or after October 18, 2018, will be subject to the 3-year look-back period. So, any veteran or spouse who may need VA pension benefits should have a qualified financial planner and VA accredited claims agent review their specific situation to get the wheels in motion. 

I have a colleague, Christina Clark, who is a VA accredited claims agent and disability advocate, and she will work with me to assist any veteran or spouses of veterans who have interest in learning more about these VA pension regulation changes and how it may impact them in the future.

Please call me at (954) 719-1151 to schedule a time to talk!
My e-mail address is: Unterbrink@usa.net also.

Warm Regards,

~Barry L. Unterbrink

Chartered Retirement Planning Counselor

Stocks Sell Off 3%; Time to Have Your Plan in Place

It was a particularly nasty day Wednesday for the U.S. stock market. The selling started off from the get go at 9:30 a.m. on the opening, and continued into the close at 4:00 PM.

The reasons that could be used for the selling today include the recent march higher in interest rates, the uncertainty of the quarterly earnings reports to begin flooding out next week, the effect of the trade tariffs with China – to name a few. At the end of the day, sellers outnumbered buyers 9 to 1.

The popular Dow Jones Industrials fell around 830 point or 3%, the S&P 500 fell 3.3%, while the Nasdaq Composite shed 4%. Ninety percent of the trading volume was down trades. The Dow Jones stood at the 800 level when I started in this business, many moons ago !

The best performing sector, Utilities fell about ½ percent today, and very short term bond funds were break-even to up about 1/5^th percent. All 11 S&P sectors fell some to degree Wednesday. Gold rose $4 an ounce to $1,194 the ounce, so it did not provide much of a cushion; at least not yet.

We’ve enjoyed some nice gains the past few months in Technology and the Health Care sectors. They are ahead year-to-date 13% and 11% respectively after today’s sell-off. Just four sectors are losers this year thus far: Financials, Real Estate, Consumer Staples and Materials.

Before panic sets in, consider where we have come this year, on top of the nice gains of 2017 – up 25% - the Dow is back to where it stood in mid-August, while the S&P 500 is equal to its mid-July level. Generally the last two months of 4-6 % gains in these two indices has been erased thus far in October. For a long term investor, that should not be a concern…BUT, you have to assess what you own and how tough a stomach you have to hold stocks with losses – or perhaps gains that are eroding. For that, you need to do some math. Grab that calculator, or slide-rule. 

We suggest, as we’ve stated here regularly, to use a stop price at which you will sell. Your broker or advisor should be talking this up as part of your portfolio strategy. 

For instance, if you bought a stock or mutual fund for $100, you would sell it at $92 for an 8% loss if you used an 8% stop price. If you have further questions on this, e-mail me for a look-see on how to set this up. I offer free consultations.

Interestingly, on a historical basis, the last stock market bear market – the 2007 – 2009 financial crises, started in early October 2007; the 9^th of October to be exact. The Dow stood at 14,164 that day, and fell to 6,547 by March 2009, a 53% loss. It would take another 4 years, to March 2013, for the Dow to break above the 2007 high. That’s a lot of time to fret and second guess things.

So I recommend to have a plan, enact it, and then follow it. Take your emotions out of the equation.

Thanks for reading friends.