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Opportunities and the Case for Optimism

Opportunities and the Case for Optimism

| March 13, 2020
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Thank you to everyone who made it to coffee club. We expect another great turnout for Wednesday's Webinar.  Look at these article headlines (and please save me the best ones).  "Plunge, Route, Tragedy..."  What a wonderful way to sell more papers and advertisements! We officially entered a bear market this week and many blue chip stocks are trading at very attractive lows. This gives us the opportunity to capture higher dividend yields and upgrade our earnings per share for cheap.  I am not the only excited one either.  This is the kind of market that we Value Investors pray for because the market will go up on its own but it takes prayer and panic to create these opportunities that we are seeing today.
Remember that we know markets are volatile and when we built your portfolio, we kept this in mind.  Make sure to fasten your seat-belt during this turbulent time.  Volatility is generally brief and always expected.  Let us use it to build a better plan, portfolio, and future.   The capital markets are powerful tools that we use to build wealth but much like any tool, they can be used incorrectly and destructively.  (I don't know how many times I've smashed a finger with a hammer or cut myself on a saw.)  It is important to remember the rules:
  1. Remember what your portfolio is built for and why we built it
  2. Stick with quality investments and don't speculate
  3. Balance and diversify because you can have too much of a good thing 

Now for the fun stuff.  Here are a few ways to take advantage of volatility and economic concerns:

  • Consider taking advantage of consumer deals.  If you need to book travel for your future vacation take a look at the current fares, hotel rates, and other industries affected by the panic.
  • If you haven't funded your retirement, get ahead.  If you are already retired, consider reducing your withdrawals and reinvesting that cash flow.
  • Refinance your mortgage at current historically low rates.
  • Generate paper losses using lateral trades or our standard Halloween harvest strategy.
  • Have you considered a Roth conversion to take advantage of low prices to pay lower taxes?
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