Today is the Day

While working in my office this morning, with Fox Business News on the television (as it is always on in the background when I’m in the office), I was distracted by a gentleman being interviewed who is a commercial and residential real estate developer in Atlanta, GA.  He was discussing the fact that real estate prices, for both commercial and residential properties, are lower in his city than they were 10 years ago!  He then went on to say that Atlanta is a top ten city in the U.S. and he believes these declines aren’t any different than most other cities in the country, which is hard to believe for a city that has been such a “hotbed” for the last thirty years!

Shortly thereafter, I was struck by the tremendous decline in the stock markets today.  The DOW was down almost 500 points and finished down over 400 points, for a loss on the day of over 3.5%!  The NASDAQ and S&P 500 were down over 5% and almost 4.5%, respectively! Tomorrow’s USA Today Money section headlines could just repeat last Thursday’s headlines: “Stock Markets: It’s a Scary World”. Or, was that Friday’s headline? Oh yeah, it was almost the same both days!

On my very first phone call after the markets closed, I couldn’t believe my ears when I listened to a potential investor tell me that he was going to postpone his investment in our Life Settlements, because of these declines! I kindly asked him to please explain his rationale behind such a bizarre reason.  I could understand if he needed income-generating investments off of his entire portfolio or if he didn’t have the funds to meet the minimum investment, but not investing in Life Settlements because of stock market declines…this just didn’t make sense to me as Life Settlement investments are not affected by stock market volatilities.  He went on to say that his portfolio has declined recently, especially over the last week or so and the money he wanted to allocate to this investment…”I’m going to wait until the market comes back up”.  Now I really can’t believe what I’m hearing!!!

We don’t live in the same times we used to.  It used to be that investing in real estate was a sure thing, you could expect decent (if not great) returns, and at least you always had something to show for your investment.  It used to be that over the long term stocks would increase too.  Well, unless you can pick the next Google or Apple, don’t be so sure.  Do you really think your broker can?  The world that we live in today is truly just that:  the world, yes, the global marketplace.  What goes on in Europe or Asia or the Middle East, or anywhere else for that matter affects what happens here.  Not to mention the effects that the “fear factor” over a potential global recession, and our own American politics can do to the traditional markets.

I’m probably not telling you anything you don’t already know.  So why did I have that conversation with that prospective client earlier today?  Certainly, he knows that he could be waiting for a long time for his portfolio value to get back to where he wants it to be so that he feels comfortable diversifying away from the traditional markets, if it ever happens, right?  Certainly, he knows that he could continue to experience losses and ultimately be left with very little, if anything, right?  Well, the reason is (with no disrespect intended) that he has a “stick-my-head-in-the-sand-and-ignore-what’s-really-going-on” mentality with an ill-conceived belief in the markets of the past.  Wouldn’t a better strategy be to go ahead and diversify some of his portfolio NOW into an investment that isn’t affected in any way by the traditional markets and economic factors?  He could even look at it as a defensive strategy, or hedge against all of the volatilities and uncertainty out there.

So, why not do it today?  Times are different than they were in the past with respect to the stock and real estate markets.  However, the good news is that you don’t have to be stuck in the stock market! Why not diversify some of your money into an investment that has nothing to do with the traditional markets?  At least you don’t have to worry about your investment potentially declining on a daily basis or whether or not your advisor is paying attention to your portfolio.  How much is peace-of-mind worth to you and your family?  Don’t wait for some time that may or may not come…TODAY IS THE DAY!

There’s the old saying:   “The definition of insanity is doing the same thing over and over again, expecting different results.”

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