One day, this past week, I was enjoying a pleasant lunchtime conversation with a long-time client. Also on hand was my brother, Tony, who is another member of our portfolio management team. As you might imagine, since there is so much going on in the world right now, our talk covered a lot of topics. But when we got around to the purpose of our lunch meeting, our good client put forward a question. He simply said what had apparently been on his mind for a while: “I wonder if I’m taking too much risk in my personal holdings. What do you guys think?’  I was first to reply by saying that it is indeed possible to take on too much risk. In fact, people do it all the time. And that is exactly why we take great care to find the right balance for each of our client’s needs. Goals and ‘risk tolerance’ are the two main elements in determining the best investment strategy for every individual. In his typical wisdom, Tony suggested that perhaps we were not aware of the biggest risk of all.

Human innovation has always been derived from risk, so why should we cease or even hesitate in our drive to build and grow our portfolios? Experimentation, innovation, and learning new things are all tied to curiosity and the risk of failure…or success.

With that in mind, perhaps you might consider that possibly the biggest risk is failing to recognize that risk does, and will, exist — whether or not you are choosing to participate. Risk should not be accepted recklessly. It must be managed.

On the good side, risk is often equated with action, and the more risks – and action – we take, the more we learn. And, the more we learn the more we can create opportunities to benefit from the knowledge and to minimize the downside of risk. Taking risks keeps us fresh, vibrant, and innovative. It may cause stress and anxiety, but scientists are discovering that stress triggers us to be more focused, more empathetic, and better at adapting to adversity. It’s part of our quest for survival.

We, as a species, are naturally afraid of failure. Yet in science, in art, in sport, in business, in life – risk and failure elevate us to the next level. We don’t progress doing the same thing. Build a strong foundation, assess every factor you can, but take that chance. Embrace the risk.

I am not suggesting for a minute that anyone should consider paying NO attention to risk.  Rather, we grow our clients’ portfolios by appropriately managing risk. With that in mind, we continue to hear stories of people who have been holding only cash this entire year.  The price of ‘safety’ for them was missing out on some really good earnings and growth this year. Searching for that ‘safety’ can be a risky business in itself. If you happen to know one of those people, do them a favor and forward them our market minute for today.


Market Minute 12/1/2017 –
Last Quarter of the Year

Seems like it was just a short time ago we were talking about the Dow Jones Index reaching 20,000 (actually it was earlier in this year) and today it’s firmly into 24,000 plus! As we’ve said, earnings have continued to surprise to the up-side, and now we can comfortably say that earnings ‘globally’ are continuing to surprise to the up-side. The market tends to value companies more highly as they grow their earnings, and with that in mind we expect the global melt-up to continue. (No guarantee of course, but this is our expectation).

That said, many portfolio managers have holdings that are up a great deal this year, and we would anticipate that some of them will take their profits now rather than waiting to the very end of the year. This is likely to cause some volatility – so this is just a note to say we are still in a good bull market, don’t worry about the headlines and the occasional day-to-day variations.  And if you have excess cash sitting in non-productive places, you might think about moving some of it to the markets. Just sayin’.

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051

Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk

www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw(at)denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.

 

LFS-1961372-120117