Don’t Order the Soup du Jour!

Fall is almost here. In South Florida, that basically means that the low temperature for the day will dip all the way down to 75 degrees! But in the stock market, the dips can be much more significant. At this time last year, we were hitting new all-time highs - and then the indexes dropped about as fast as Miami Dolfans playoff hopes (sorry, I am a lifelong Miami Dolphins fan and thought this would resonate with you.) In fact, by the end of 2018 the equity markets finished in the red, completely reversing what had been a very profitable continuation of this bull market. Speaking of bull markets, this one has been among the longest on record, nothing that most readers haven’t already heard or read elsewhere.

That’s why my message this month isn’t about lengthy bull markets, when they end, how it will unfold, blah blah blah. My message is that this fall, there is a good chance that the volatility we saw in August will continue. That means that talking heads will no doubt point to the end of the bull market, after all, who doesn’t want to be on record for accurately calling the end of this historic run?

What does this have to do with ordering the soup of the day? The marketing departments of financial services industry will be hard at work to use “expert” predictions and a bumpy ride in the stock market to get you to buy product. My message isn’t to predict when the market will end, my prediction is that you are about to get bombarded with stuff you don’t want or need. The gold bugs will point to monetary easing around the world and currency will not be worth the paper it is printed on. Your banker will highlight those four little letters - FDIC! So what if the interest they pay starts with a decimal point?

But the real fear monger is the insurance agent. Mrs. Client, do you want zero risk with market returns and no fees? Who doesn’t?  If you believe this, I know of a bakery that makes the most delicious pastries that have zero calories. Allow me to dive a little deeper here. Ever since the Great Recession, I have seen the pitches made to clients by the insurance industry involving all sorts of products, none more frequent than the annuity. Annuities come in all shapes and sizes - Fixed, Variable, Indexed and Structured. They have many different cost structures (read - fees) but if you are getting a steady dose of annuity ideas, you can bet there will be a nice commission in play for the agent.

This not to say that annuities are always bad, nor are CDs and shiny metals. All situations are different, and clients are unique. The point I want to get across is that you need to beware the salesperson offering the solution to the day’s problem. The best investment decisions are usually made with a long- term perspective, not as a reaction to a short-term crisis.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making any investment decision, please consult with your financial advisor about your individual situation. Any opinions are those of the author, and not necessarily those of Raymond James.

This article was written by Gus Vega, Certified Financial Planner, Co-Founder, WealthEngage and Branch Manager with RJFS. He can be reached at 786.264.4954, 9155 S. Dadeland Blvd. # 1014, Miami, FL 33156. WealthEngage is not a registered broker dealer and is independent of Raymond James Financial Services, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA / SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.

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