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Minyan Mailbag: Investing In a Perfect Storm

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The slate is being wiped and, in time, benefits will abound.

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Todd,

Your advice has been invaluable over the past year. I do have a question as you look out over the next couple of years. It deals with how to guide the middle market investor as they continue to invest in their 401k for retirement. Obviously, we have waded into the perfect storm where bonds and stocks were battered but how do you guide these folks going forward?

A big part of my job is helping folks plan for future goals and now many are asking what is going to happen now? I am having a hard time answering with the common financial planning phrase of "continue to dollar cost average, the market will come back". It seems that everything has changed and now that major decade long trend lines are broken will it in fact come back? I am really wrestling with how to guide folks in their 401k's and retirement plans at this point.

As you look out over the next couple of years do you see this market continuing to drop like many are forecasting? It is a tough question to ask, I just don't know where else to turn to get an objective response. A lot of folks need reassuring that things will get better. I just don't know that I can give it to them.

Thanks,
James


Minyan James,

Thanks for your kind words. To be clear, we don't "do" advice because it's impossible to offer advice to a faceless audience without knowing their unique time horizon and risk profiles. The greatest caveat of financial media is that most people want to be told what to do rather than learn how to do it. Minyanville's founding principle was precisely the opposite and yes, we were early on that too.


Give a man a fish, he'll eat today. Teach a man to fish, he'll eat forever. Show a man how to sell the fish he caught and you create the building blocks of societal and industrial change. Therein lies the opportunity of our new world order. The slate is being wiped clean and benefits will abound for those proactively prepared. We simply have to get there in one piece.

Our unfortunate destination is debt destruction but it's yet unclear the path that we'll take to get there. We often speak of Our Wishbone World-deflation on one side, hyperinflation on the other-and the devil of those details are drastically different. That, in my view, is the single biggest potential trap-capital preservation will erode with further dollar devaluation and capital conversion will be a proactive necessity. We'll take that journey one step at a time and monitor it as it unfolds.

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