The other day I got an excellent question from a reader (below), which really cuts to the core of what I am trying to do here. I was going to respond to her directly, but then I decided it was such a good question that it deserved a post of its own.
“Many of your blogs talk about how various elements of the economy are strong, and damage from various forces doesn’t look threatening ‘yet.’ For example, the yield curve is heading south, but we typically have 12–18 months before impact. Could you talk about ‘when yet arrives.’ In other words, what should we do to be ready when some of these warning signs actually start to manifest? What kind of contingency plan do you have, and what does it include? What do you consider in starting to think about what you will do when the market enters its next phase based on all the indicators you write about?”
The real question here, as I read it, is what should an investor take from this blog, and what can you expect in terms of guidance when “yet” arrives? To help answer that question, let’s start with what I am trying to accomplish here and follow it up with what I can’t do.
What I’m trying to accomplish
What I want to do is, first, to educate about the economy and markets; second, to inform; and third, hopefully, to entertain at the same time. Note that advising people on their portfolios is not on that list. I provide context for decisions; I don’t provide guidance on them. The reason for this is that I simply can’t in this format. I do know the economy and markets, but I don’t know you. I don’t know your individual situation, I don’t know your needs, and I don’t know your desires. I can give you the tools, but I can’t build a house you have to live in.
More to the point, I work with and for people whose job is just that: to know you and your needs and to help you design a program that gets you to your goals. Commonwealth financial advisors (and financial advisors in general) do just that, and they do it much better than I can as a blogger. I wouldn’t presume to try to advise people who are not my personal clients because I know that would be a disservice to both of us.
If I won’t tell you what to do, what good am I?
I won’t build the portfolio for you. But I can give you the tools to think about what you really want—the tools to know what to worry about. To use a favorite metaphor of mine, I am the weatherman during hurricane season. I can let you know when the storm is coming and where it is likely to hit. I can’t decide to pack up the car and leave or, conversely, to ride it out. I can, however, give you information on timing, severity, and the like that can help you make that decision either yourself or with your advisor.
That’s not to say I don’t have thoughts on various ways to deal with a pending storm, just that I can’t effectively present them in this context. I am finishing a book on just that topic, which hopefully will be out next month. Plus, it takes more space than I have in the blog to lay out a strategy in enough depth to allow investors to really understand it. I do have thoughts on the matter; I just can’t do it here. (I will be talking more about the book as we get closer to release.)
Thanks for reading!
Fortunately, I suspect many of my readers have advisors who can help them do what I can’t. For those of you in that group, I am trying to give you the knowledge to work effectively with your advisors. For those who don’t have advisors, I am doing my best to give you the information to make good decisions on your own. Hopefully, you find it helpful. If not, let me know how I can do better. After all, you the readers are why I do this every day.