By Jeff Headrick, Financial Planner
"Preparation is key. It’s a lot easier to stand strong during adversity if you’ve done your homework beforehand."
Whether I’m running the South End of Wrightsville Beach on a windy fall day, or facing a professional or personal adversity, the following holds true: stand strong.
During a crisis of any kind it is critical that we hold on to our values and core beliefs. In investing and in life, I have found that standing strong and remaining calm is a sound battle tactic.
Preparation is Key
I’ll never forget a guy asking me back in 2008 during the financial crisis— how was I doing? I remember his look of astonishment when I told him I was doing fine and that my clients were generally pretty happy. This was very hard for him to understand so he asked me for an explanation.
The best way I could explain it was this: you prepare for a storm before the storm arrives. Reacting to a storm during a storm may help, but the former is preferable.
While I didn’t realize it at the time, I was preparing for the 2008 crisis in 2005. I was reading books by William Bernstein and Richard Ferri. I was learning institutional styles of diversification based on thoughts by Economic PhDs such as Harry Markowitz. At the time, I was studying these diversification methodologies just to be good at my profession. I also had a love for investing. Looking back, I was just doing what I liked to do!
But when my clients’ portfolios held up better than I had expected, I realized that all this reading and learning was paying off not only for me but for my clients. If you’re going to be a great investor you need to drink deeply from great books. You need to learn the craft or hire somebody that is passionate about learning it for you.
Preparation is key. It’s a lot easier to stand strong during adversity if you’ve done your homework beforehand.
In the world of investing it’s really easy to change your strategy. Actually, it is way too easy to change your strategy. If you have access to a computer and are literate, it is kind of scary realizing how quickly you can mess up a great plan. If your portfolio is diversified and you were comfortable with your stock to bond ratio pre-crisis, it may be advantageous for you to stick with that strategy. If you have just started working with a professional who has new ideas that he or she can substantiate, you may be better off to make some adjustments.
Either way, the books you read and the financial relationship with your financial planner that you had before today should play a huge role in helping you stay the course. If you are not doing your homework and do not work with a professional money manager then you may find it easier to entertain ideas of altering your original plan. This is why I believe wholeheartedly that just about everyone needs to work with a financial professional.
If you have prepared well and have a good plan, it is often more beneficial to stick with that and to stand strong in order to let things run their course. If you have not prepared well, now may be a wonderful time to find a professional that you respect and trust in order to help get you through the current Covid-19 crisis.
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Jeff Headrick is an independent financial planner and wealth manager with Inspire Financial Planning. When Jeff was still in his teens his father died unexpectedly. While his father was a hard worker and a good provider, he did not have the best financial plan in place when he died. This left his family at a difficult financial crossroad. This personal experience, coupled with being inspired by Sir John Templeton, Warren Buffett, Dave Ramsey, and the laws of compound interest, prompted Jeff to enter the financial services industry in 1999. He has been helping people with their financial planning ever since. Jeff lives in Wilmington, NC with his wife and two children. He spends most of his spare time just across the Intracoastal Waterway in Wrightsville Beach, enjoying the beauty of the NC Coast.
Charts and graphs contained herein should not serve as the sole determining factor for making investment decisions. All hypothetical scenarios are for illustrative purposes only. Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.
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