Searchlight Financial
by Lorine Parks
The market takes the stairs going up, but the elevator down.” “In a bull market, everybody’s a genius.”
“My favorite client has two rules. Rule #1, don’t lose money. Rule #2, see rule # 1.”
With pithy zingers like these, financial advisor Sarah Braddock of Searchlight Financial in Beverly Hills, gave us a talk on investments for 2017.
Evidently pegging our group as near retirement age, she pointed out that we want safety first in our investments, rather than growth. “Be investors, not speculators.” Retirees should be looking for a combination of higher returns with safety.
“Investment,” Sarah said, “should be like watching paint dry, or grass grow. If you want excitement, go to Las Vegas.”
While admitting that no one knows what is going to happen, Sarah did point out instead what has happened historically when a new administration comes into power. “In the first year,” she added, “a new administration gets rid of excesses. Then it spends the next three years getting ready for re-election.”
At first, the market drops, because the new government is unknown, and the market does not like the unknown. Then the market over-reacts, rising and falling sharply.
“What we do know,” Sarah said, “is that the rate of interest is going to go up. It went up in December, and will go up probably three more times in 2017.”
In a well-balanced portfolio, Sarah said there should be stocks, bonds, real estate and insurance. That way, if one area crashes, there will still be returns from the others. Possible warning signs Sarah listed are times such as now, when the NASDAQ and the Dow go up together. Historically that has signaled a possible crash of the stock market.
As for tax cuts, they mean higher profits, Sarah said, but if the market gets out of hand, “Can we stand another stock market crash? Look at 2008.” Time to look at bonds. “A rule of thumb has been, have your age as the percentage you should have in bonds.” A more traditional balance has been 60% stocks, 40% bonds.
At this point Sarah called for questions, but there were none, not because we hadn’t been listening, but because our minds were digesting all the possibilities she had raised. And trying to figure out what the age percentage thing would be.