Never Let a Crisis Go to Waste


Many years ago, before we advised and managed wealth for expats, we trained investment advisors on investment strategy. The year was 2008 and, as you surely recall, stock markets were dropping with no end in site. Individuals started to panic first, followed by professional financial advisors. We were in a unique position because we were able to witness how financial advisors reacted during times of crisis.

The advisors who did the most harm to their clients panicked and sold out of stocks after it was too late. After all, nobody can reliably forecast the direction of stock markets. The best advisors acted differently, however. They were calm, resolute, and disciplined in their approach. They knew in the moment of greatest fear to never let a crisis go to waste.

Winston Churchill also knew this all too well.

If you have a good example of not letting a good crisis go to waste, please reply to this email. We would love to hear about it. While you may be worried about the future or the direction of markets in the short-term, there are always strategies that take advantage of market movements which have nothing to do with market timing.

One of the simplest is periodically rebalancing your portfolio to its original mix of assets. In a simplistic version of this, you might have a mix of 60% stocks (including international, small and large cap etc.) and bonds (treasuries, corporates and various maturities), and suddenly the market goes up or down in a hurry. You have either more than 60% or less than 60% stocks, so you sell or buy back to the original tolerance. If you are disciplined about following this process, you will hopefully end up selling when the market has gone up (locking in gains) and buying when the market goes down (taking advantage of bargain prices).

This investment strategy is not nearly as exciting as predicting where the markets are going to go next-which is what the financial press tends to focus on. But since predicting what the markets will do in the future is a fool's errand in the first place, the boring approach of taking advantage of what the market offers is not a bad alternative.

​To good times ahead!

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We specialise in helping expats invest and enjoy retirement without the stress of money.