What We Can Learn From 2018

By David Geller   |   January 25, 2019

We were reminded that stock and bond markets go both up and down. Down markets are often hard to stomach. JOYN advisors spent lots of time talking to clients to help calm their nerves and maintain their disciplined investment approach. If you are nervous, please give us a call.

Even in a year where virtually all asset classes declined, diversification helped cushion the blow. Portfolios with bonds outperformed more equity-oriented portfolios. In December, international (MSCI EAFE) and emerging market (MSCI EM) stocks declined 4.9% and 2.7% respectively, while US large cap stocks (S&P 500) sold off 9%.

Down markets don’t feel good but help enhance your long-term returns. Think of it as having sore muscles after going to the gym. Down markets give us the opportunity to purchase assets on sale and harvest losses, reducing tax costs by offsetting capital gains.

Like so many things in life, excellent execution and discipline are what drive success in the investment world. In 2018 your team of JOYN investment professionals systematically harvested tax losses aggressively worked to reduce your internal investment expenses, and carefully monitored your mutual fund holdings to minimize taxes resulting from year-end capital gain distributions.

We learned how volatile a concentrated portfolio of high-flying stocks can be. FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) have spent years in the spotlight but experienced gut-wrenching declines in 2018 as these stocks dropped (peak to trough) 44%, 37%, 36%, 45%, and 24% respectively.

Good sailors are not determined by how they sail on bright, sunny days when the weather is ideal. Good sailors are recognized for their skill and courage when faced with fierce winds and choppy waves. Most asset classes weathered a stormy 2018, but JOYN’s reliable portfolio construction process allows us to sail confidently into 2019.

• We help clients understand their true risk tolerance based on ability and
resilience to endure market volatility.
• We strive to optimize portfolios to achieve the most return for their level of
risk.
• We incorporate difficult years such as 2018 into your financial planning
projections.
• We perform deep dive research on each asset class and adjust our allocations
accordingly — over time this helps you take advantage of market declines.

Most importantly, we care about you and are here for you regardless of whether 2019
brings rough seas or smooth sailing.

David Geller

About the Author

CEO David Geller co-founded the firm in 1991 and led the creation of Behavioral Wealth Management. Recognized on numerous prestigious "top financial advisor" lists, David is an in-demand speaker for professional groups and JOYN workshops. His writings have appeared in The New York Times, The Wall Street Journal and The Huffington Post.

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