Sometimes it's nice to hear from a different voice. My friend and former colleague Jeff Troutner just wrote an interesting article on tariffs and (more importantly) investing that I thought you'd find interesting coupled with our NZ additions. Jeff is a retired US adviser who was a member of the Geneva-based global association that we helped co-found in 2016.
If you'd like an electronic copy of the Investment Mosaic. We have just updated it with 2024 data.
The inevitable is happening as I write. US and global Stock prices are falling as short-term investors have become increasingly concerned about…what?
Potentially slower economic growth in the US? Will NZ be entangled in tariffs? Continuing economic decline in Europe and China? A "tariff war" with Canada, Mexico, and China? The war in Ukraine (more billions flowing in or not enough)? DOGE (not enough waste fraud and abuse found or too much)? Orange Man good, Orange Man bad?
Pick a narrative. Wall Street wants you to.
You alone, with no prodding from your stockbroker or investment adviser, might be tempted to pick one. Maybe because of what family or friends are saying or what your favourite media sources are saying or maybe because you're simply watching your portfolio values decline (not something we take lightly, which is why we put so much value on our advisory responsibilities).
You feel the pressure and the pressure says "do something"!
Always remember the old saying that ‘bad news sells newspapers’ and makes for great click bait.
Before you do something (other than allowing us to do structured and disciplined rebalancing), consider what you signed on for with an asset class investing strategy.
You entered a different universe than the majority of retail investors and even most institutional ones. For good reasons.
· This universe rejects short-term narratives as fleeting moments of high anxiety that fuel the destructive emotions of fear and greed.
· This universe fully embraces the modern science of investing—still evolving and constantly fuelled by the well-deserved scepticism of an exploitative industry.
· This universe looks forward, not backward
· This universe focuses on a dynamic, free-market fuelled economy that rewards innovation, competition, and capital investment.
· This universe doesn't worship individuals no matter how "smart" they are or how hard they try to make you believe they're smarter than everyone else. This universe values only the results of individuals and teams that are supported by the highest levels of research and have the kind of staying power to create, preserve, and grow your wealth using the extraordinary power of compounding.
This is why we reject short-term thinking and the emotions it elicits. This is why we reject stock picking and market timing, which chip away at (sometimes substantially) the power of compounding. This is why we're so transparent and passionate about what we do.
This is why we're optimistic about the US economy long-term. We hear news of Apple committing a new $500 billion investment in America. And SoftBank another $100 billion. Same with TSMC, the largest computer chip maker in the world. Tesla, SpaceX, Nvidia and many other companies innovating and expanding in the US.
We don't need to, or should, concentrate our investments in those companies to reap the benefits of their optimism and risk-taking. In fact, broad diversification and a healthy and productive understanding of long-term risk and return is more than sufficient for us to help you realize your goals.
Remember that investment portfolios, pensions (including KiwiSaver) are long-term strategies and form but a portion of one's overall wealth. When I talk about wealth, I mean it in the holistic sense - health, wealth, and welfare. True prosperity encompasses far more than just financial assets.
Yes, the short-term can be messy and scary. We don't wish to diminish the concerns of older clients living off their portfolios. We have family now in the same boat. We get it.
But in times like these, simply staring at the Investment Mosaic and considering the perspective it provides gives me the confidence to stay the course. If that's not enough for you, you should not hesitate to pick up the phone and discuss your concerns with the adviser you have trusted to help guide your financial future. As we have always said - having a face-to-face adviser during volatility is why we are here.
Patience rewarded.
1928-2023: 96 Years of US Total Stock Market Returns.
The History of Market Ups and Downs
· Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Blog no. 9.
· The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
