I’m thinking of an acquaintance who made some financial decisions that he wishes he could take back. Let’s call him Hal, which is not his real name. As an engineer, Hal had substantial wealth that he invested in the stock market. He watched the markets rise with glee. But in 2008 and 2009, when the markets tumbled, his emotions got the best of him and he sold everything.

After the market rebounded, Hal did not reinvest. He felt burned from the volatility. Needless to say, within a year, Hal had huge regrets.

Today many people feel that market volatility has made long-term investing, even any kind of investing, unadvisable. Do you feel this way? Do you believe that this is a bad time to be in the markets? I want to share an alternative perspective with you. 

profile picture for Robert Peckenpaugh
"It is my great privilege to serve my clients at Whitnell. I’m also delighted to mentor young people at this company. Mentoring is one of the ways I help ensure our next generation of leaders have the skills and expertise, as well as the values, that have made this company strong for many years."


Wealth management and investing

Before I offer you my perspective on investing today, I’d like to characterize how investing fits within the larger framework of wealth management, the core of what we do at Whitnell.

When most people think about financial advisors, they picture an investment advisor, someone who recommends stocks, bonds and other types of financial products. That’s not quite an accurate picture of what we do at Whitnell.

Our approach is to deliver a level of service that we describe as wealth management. Investment advice is an important part of our wealth management services, but it’s only a part. Wealth management addresses a wide range of financial concerns. This comprehensive approach is designed to achieve a person’s long-term financial goals.


My role as an investment advisor

My role at Whitnell is that of an investment manager. Serving on the Investment Committee, I help identify and select what we consider to be the best possible investments for our clients.

The reason I tell you this is because over the years that I have been an investment advisor, I’ve seen people make good choices and choices they wish they could take back, sort of like Hal. When you’ve been in this business as long as I have, you get the opportunity to learn a lot of things. I’d like to share with you some ideas that might guide you toward selecting investments for your unique situation.


Who is the investor?

My clients have worked hard, sometimes for a lifetime, to accumulate the wealth they have today. Some of my clients know quite a bit about the stock market and investing. Other clients know very little and quite frankly don’t want to know more. They want to know that I know.

I am the investor for my clients. It’s my role to deeply understand my clients and to pick the right combination of investments that are most likely to achieve their goals, given their investment timelines.

It’s my job to be on the lookout for great values to bring to my clients that fit their objectives and risk tolerance. I’m always thinking of new and better ways to help my clients achieve sound financial returns.

But after doing this for a long time, here is what I have come to realize. Investing based on emotions is disastrous - about the worst possible financial decision a person can make.


Buying high and selling low – a formula for financial disaster

People tend to feel confident when they have optimistic expectations about themselves and their future. But I encourage you to think differently. High expectations unsupported by good valuations can be dangerous when factored into stock prices. Warren Buffett famously said: “You pay a high price in the stock market for a cheery consensus.”

Human emotions about investing range from overly optimistic to overly pessimistic. Stock prices tend to reflect prevailing consensus expectations. Facts are important over the long term, but it is expectations, based on current or recent developments, not the facts, that drive markets over the short term.

Do you believe that expectations for the market today are realistic, too high or too low? Expectations for interest rates, inflation and earnings are critical factors in the valuation of securities because stocks and bonds are forward-looking. Sir John Templeton put it this way: “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”

Where are we now?


The market situation as I see it

When you look at the trend of stock and bond prices, it would appear that the market is selling on the basis of low expectations. With interest rates at historic lows, even negative in some countries, there are signs that bond markets are in a bubble.

The Fed has been keeping interest rates low for the last seven years; it could shake up markets whenever it raises rates.

With bond prices high and yields so low, I am not convinced that bonds and other fixed type investments offer a reasonable return at today’s entry point. They simply don’t offer a decent return for those who want to get into the market now.

So what are we recommending at Whitnell today?


Is This a Good Time to be an investor?

I believe this is, in fact, a good time to be an investor, if you have the right mindset. What should investors be thinking about? Here are the core strategies that guide our decision-making process as an Investment Committee.

  • Have funds available that you can commit for long-term investment
  • Find investment opportunities where expectations and valuations are low 
  • Buying quality is always the better value
  • Be patient – take the perspective of an owner for the long-term, at least 3-5 years 
  • Avoid allowing the expectations of the crowd to define your decisions


What’s right for your situation?

The entire team at Whitnell stands ready to help you protect and grow your wealth. So if you haven’t had a conversation with your Whitnell relationship manager in a while, it’s a good idea to check-in and talk about any changes in your financial situation. Let’s make sure we have the best possible plan to take care of your entire range of financial needs.

But as it relates to investments, my core area of expertise, I’d like to leave you with this parting thought. Whatever the mood of the market, Whitnell believes that equity investments, bought properly, have the best opportunity to maximize long-term returns as part of a strategic asset allocation plan. You put yourself in the best possible position to achieve your goals by taking the long road and taking emotion out of the equation.

If you would like to discuss how we invest wealth, please drop me a line or stop by the office.


The information contained in this article is provided for informational purposes only. No illustration or content in it should be construed as a substitute for informed professional tax, legal, and/or financial advice.