Would you have expected this?

Today, March 31st, represents the end of the 1st quarter of 2011.

Three months ago, on January 1, 2011, did you expect:

The leader of Egypt to be peacefully overthrown?

The price of oil and gas to increase significantly?

Revolutions to be underway in many Middle East countries?

A major earthquake and tsunami in Japan?

We didn’t either.

However, even with all of the above events, do you realize that the S & P 500, a broad index of 500 large US companies, increased over 6% during these same 3 months.

  • This is the largest 1st quarter increase of the S & P 500 during any year from 2001-2011.

Readers of this blog and clients of our firm know that we believe in investing in a globally diversified stock portfolio. This would include large and small US companies, as well as large and small companies in countries throughout the world. Most other “asset classes” also had similarly positive performances during the first 3 months of 2011.

One quick lesson from this information:  Even during times of crisis and unexpected news (and almost all periods have some of both), the stock markets throughout the world may still be positive.

That is why we firmly believe in the importance of focusing on the long term and planning for the long term, and not to be focused on the day-to-day volatilities of the stock market or world events.

Value of a Financial Advisor: Perspective

As I sit at my desk, with spring beginning to arrive in Farmington Hills, MI, it is hard not to think about world events and their impact on the financial markets.

The horrific events in Japan, both nature and nuclear, are profoundly sad and scary. The events in the Middle East over the past months may be very positive, resulting in increased democracy and freedom for many, but could result in oil disruptions.

Neither of these series of major events could have been predicted on January 1, as 2011 began. As no one could have predicted these events, no one could have made investment decisions based on these events occurring.

Which leads to one of our  basic investment tenets:  we focus and plan for our clients, for the long term. While we recognize that there are many issues and problems in our country, and throughout the world, we try to assist our clients by keeping a long term perspective. While the events of today are important, they should not control or even impact your financial goals, which may be decades into the future.

As we plan, we are realistic, but optimistic about the future. Our country, and the world for that matter, has proven to be very resilient, if viewed by years or decades, and not day to day. For any time period you select, challenges were faced. Thus, we structure your portfolio with safe, fixed investments for the short term or to provide a foundation of current cash flow, and with stocks to provide growth for the longer term.

We plan for our clients when we begin to work with them. We develop an Investment Policy with them. Then, at times like this, or during 2008-09, we are here to talk to them, if they desire. That is key. By talking about the financial markets and what is going on in the world, we help our clients to keep a long-term perspective, which really means they are able to keep their long term strategy in place (and not panic). That is key to helping their investment experience to be positive, so they will have the comfort and security to know that we are helping them move toward reaching their financial goals.