32 Community Columns
Ponte Vedra Recorder · October 15, 2015
Go ahead: Manipulate me!
To paraphrase the revolutionary
patriot, Thomas Paine: “These are
the times that try investor’s soul.”
Without a doubt, I believe the past
couple of months have been among
the worst that I have witnessed in
quite some time. I recognize the
importance of staying in touch with
clients, especially
during moments
of uncertainty,
as fear can be a
powerful force
that can propel
smart people to
make bad decisions. After all, it
is only human to
Harry Pappas
react emotionally
Columnist
to the plethora
of negative news
and fear mongers, especially when
our money is on the line. Moreover,
many peeps still cannot shake the
memory of the stock market crash of
2008. Regrettably, history has proven
that during times of apprehension,
anxiety, and discomfort, folks often
lose faith in the stock market, subsequently wave the white flag, and
dump their holdings. In other words,
we allow the talking heads to convince us to give up on our long-term
strategy and to follow their doomsday forecast. Yes indeed, many investors may have been manipulated
during times of volatility!
I find it amusing when the financial press assigns a culprit for the
reason to panic. For example, back
in May the offender was Greece. A
little over a year ago, the perpetrator
was Ebola, and before that, it was
the fiscal cliff and Obama’s re-election. The current antagonist is China
and its slowing economy, along with
the Fed’s indecision on raising interest rates. I steadfastly argue that all
the gnashing of teeth about the Fed
seems like a huge waste of time.
I give virtually no attention to the
apparent “cause” of the decline in
stocks; as I consider the drops, especially the larger ones, have more to
do with investor psychology than it
does with anything else.
Please understand that I am not
suggesting, in the least, that I have
all of the correct answers or that
you should only follow my advice,
instead I encourage you to listen to
the other side. However, we must
strap on our “nonsense filters” and
employ common sense! As I am
sure you will agree, opinions are
the cheapest commodities on Earth.
Nobody has a shortage of views to
share with us if we are willing to
listen and perhaps accept them. Nevertheless, our baloney screens and
common sense reminds us that fear
sells, and that is what media often
enjoys parading in front of us.
I encourage you to cut out the
chart, tape it to your refrigerator, and
more importantly refer to it often. I
trust that you will arrive at the same
conclusion as your humble columnist,
yes; these declines are painful, but
they are normal and expected. Therefore, I believe there is no reason to
panic. However, I know for many
folks, that it is easier to say than do.
Staying calm and disciplined with our
long-term investment strategy during
so-called “crisis” time takes a lot of
work. It is very simple, but simple is
not easy.
Although periodic “predicaments”
are inevitable, the good news is
that recovery and potentially higher
stock prices could be on the horizon! Certainly, nothing is certain.
That is the only certain thing that
there is! Nevertheless, I do not
expect this time to be any different!
Finally, please remember that what
we do not know arguably does not
hurt us. Instead, we get hurt by what
we know and do not do. If we want
to succeed in investing, we must
stop thinking someone has a crystal
ball to the market. Nobody does.
Your educated guess is as good as
anyone’s! What is far more important
than soothsaying is to believe that
certain fundamental principles have
historically endured, diversification*,
discipline, consistency and the value
of experienced advising. I believe
we must automate our investment
strategy as much as possible and
simply get out of the way. But then
again what do I know. I am just a
curmudgeon with an opinion!
Harry Pappas Jr., CFP®, CDFA™
Managing Director-Investments
Certified Estate and Trust Specialist
Pappas Wealth Management Group of
Wells Fargo Advisors
818 A1A N, Ste. 200
Ponte Vedra, Florida 32082
904-273-7955
[email protected]
The use of the CDFA™ designation does
not permit Wells Fargo Advisors or its Financial Advisors to provide legal advice,
nor is it meant to imply that the firm or
its associates are acting as experts in this
field. Wells Fargo Advisors LLC, Member
SIPC, is a Registered Broker-Dealer and
a separate non-bank affiliate of Wells
Fargo & Company.
* Diversification does not guarantee
profit or protect against loss in declining
markets.
This and/or the accompanying statistical
information was prepared by or obtained
from sources that Wells Fargo Advisors
believes to be reliable, but its accuracy
is not guaranteed. The report herein is
not a complete analysis of every material
fact in respect to any company, industry
or security. The opinions expressed here
reflect the judgment of the author as of
the date of the report and are subject to
change without notice.
Any market prices are only indications of
market values and are subject to change.
The material has been prepared or is distributed solely for information purposes
and is not a solicitation or an offer to buy
any security or instrument or to participate in any trading strategy. Additional
information is available upon request.
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