As risk managers, it is Dominion Wealth’s duty to be a watchdog of your financial security. This means that we will only ‘bark’ or ‘growl’ when we see a looming threat. We work with you to make certain that we are focusing on all aspects of your personal ‘Big Picture.’ Taking it one step further, our focus is on your personal big picture within the really Big Picture of the Global and Financial Markets.
It is important that we communicate this to you, and that we are constantly working to assess the current levels of risk in our economy. The important message is that you can rest assured that the torrent of news and media images that are thrown at us will not derail your plans, goals, and dreams for your (and your family’s) future. It is our job to make sure you can sleep at night.
Who else needs to know this? In short, the people you care about.
The past month has seen a flurry of news regarding instability across our globe. While not due to political tensions, the horrific earthquake in Japan this past weekend has further ‘rocked’ the investment markets to pull back in the face of uncertainty about the future.
The good news is that the world will not end due to financial trauma. There is, however, the potential for further financial havoc to be wreaked as we continue to unwind 25 years of excessive borrowing and spending beyond means. Based on the demographics of the Baby Boom alone, we could perhaps see a period of economic malaise for another decade.
Nothing in this world is linear, and it is possible that the financial markets will continuously move in fits and starts over this time period. Dominion Wealth is trained on the risk and opportunities that exist in these kind of market environments and will continue to target investment growth potential where it can be found.
Knowing exactly when these fits and starts will occur is the hardest part. Some would say that being able to time the market is a fools errand, and we completely acknowledge that this can never be done precisely and consistently. However, this does not mean we should fail to be tactical in our approach to managing investments. You bring an umbrella with you to work when the weatherman says it will rain. We apply the same logic when filtering research and discovering that numerous sources confirm ‘danger ahead.’ The objective is to protect your wealth and ensure your success. This leaves you free to focus on – and enjoy living – your best life in retirement.
I have just completed reading an interesting treatise on this topic, “The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation,” by Gary A. Shilling. By his own admission, Gary has made several accurate predications about the markets, including the recessions of the ‘70s, the subprime mortgage debacle and the ensuing collapse of the US residential real estate market. According to Mr. Shilling, the deflation in real estate values in the U.S. is not over. His interpretation of the market presumes that there may be a further drop in values of close to 20%. It is also important to note that Gary sounded the warning bell years before the crash in real estate occurred.
Per http://www.realtytrac.com/trendcenter/ , there are 4 million homes currently in serious default that will most likely end up in foreclosure. Realty Trac provides an estimate that shows we will not see a return to “normal” until roughly 2015. This research, and specific data range was something Dominion Wealth first began documenting with clients in 2004.
Historically, investment advisors have one strategy: Buy and Hope. This is a wonderful strategy when the risks are low and the tide is generally rising. Dominion Wealth is fiercely independent from the herd that is guided by Wall Street and wants to buy whatever it is they are selling. These are times that demand this independent and creative thinking. We hope you will sleep better at night knowing how seriously we take our mission. We also hope you share this message with those you care about.
Until Next Month,
Your Advisors at Dominion Wealth