Assessing Your Risks


Well … we are three years into what we at OLV predicted would be a very business-friendly administration. Inasmuch as we had indicated that we felt President Trump would be a very volatile president, but could also bring about significant economic prosperity. The day Donald Trump was elected, on November 8, 2016, the S&P 500 index* closed at 2,129. As of President’s Day 2019, the same index is sitting at 3,380! That is an astounding 58.7% rate of return in just three years. You don’t have to agree with Donald Trump, how he treats people, or how he is aggressively wielding the power that has been bestowed upon him by the Constitution, to appreciate the economy’s staggering improvement.

Even if you think that all of this is due to Obama Era economic policies … well, who am I kidding? Even my most liberal Never-Trumpers agree that the economic strength and low unemployment are due to the current President’s almost unethically pro-business approach. The pro-economic growth policies that have been implemented have us at a place where the animal spirits of industry have truly taken over. Trump’s tough stance on trade agreements and his “America First” policy continue to encourage entrepreneurs and business owners to stick their necks out, take risks, borrow money and invest in new ideas and ventures. In the face of continual negative headlines, the stock market, as measured by the S&P 500, is continuing to make continual new highs. It’s almost as if the market doesn’t care about the day-to-day headlines and is relying solely on the economic data and corporate profits forecasts. Interest rates are low, lending by banks is available, and your buddies are talking again about stock tips, how big their 401ks have grown, and that they “have a guy” who’s done great for them.

Now is the time. For three years, we have encouraged clients to stay invested at the high end of their risk tolerance. We’ve encouraged them to turn off their evening news, not listen to their doomsday friends and stay the course. Although we have not reached, to steal a term from Alan Greenspan, “irrational exuberance,” we feel like we are pretty darned close. It is at this point that we encourage you to take a good, hard look at your Risk Tolerance and how your portfolio is positioned. We are encouraging our clients to go from their upper range of risk tolerance and market exposure to the lower end of their personalized range. Each individual investor is different. There is no “one-size-fits-all” investment management or risk management.

Your advisor should have many different tools to help you assess your personalized risk analysis. At OLV, we utilize a unique tool called Riskalyze®. This program walks our clients through multiple different risk scenario questions, assigns a personalized risk score, and then compares our client’s portfolio holdings in real time against the amount of risk the client is actually taking. This gives them a feel for exactly how their currently-positioned portfolio would perform in different negative market conditions.

If you’ve been able to profit from our favorable market conditions over the past three years or even if you haven’t, you need to take this opportunity to review the risk in your portfolio to ensure that the definitions of risk and the management of that risk is being appropriately managed. With the stock market at an all-time high, it really makes for a great time to call your advisor and inquire as to exactly how much risk is in your portfolio. It’s much better to do this risk check-up at market highs, rather than at market lows.

I wish you all a very happy and safe St. Patrick’s Day!
*It is not possible to invest directly into an index.

800.338.4586 The Durant 607 E. 2nd Ave., Suite 100 Flint, MI 48502
Securities offered through Sigma Financial Corporation, member FINRA/SIPC.
Investment advisory services offered through SPC, a registered investment advisor.
OLV Investment Group is independent of Sigma Financial Corporation and SPC. *It is not possible to invest directly into an index. Past performance is no guarantee of future investment performance. This article is for informational purposes only and should not be construed as investment advice.


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