Broker Check

The View: Better from the Top?

| October 12, 2015
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 The only thing you sometimes have control over is perspective.  You don’t have control over your situation.  But you have a choice about how you view it.

                                                                                                    Chris Pine 



As has been the case more often than not over the past 65 years, the market stumbled during this year’s off season. Some may have wished that we had moved to a more defensive posture than we did, in that we did not go entirely to cash.  In any event, our risk profile in the months of May through the end of September was a good bit more conservative than in the preceding months.  Looking ahead to the rest of the year, seasonal patterns are aligning for a potentially robust year end rally. There has not been a down DJIA pre-election year since 1939. Historically, a down August followed by a down September has preceded sizable Q4 gains. The fourth quarter is also the most bullish quarter of the year. Market sentiment is no longer excessively bullish while fundamentals are mixed just enough to support a Q4 rally as expectations for an improving economy in 2016 likely begin to gain traction.

Last week we saw what looks to be the completion of a “1-2-3” or “W” bottoming process.  As such, we are in the process of closing out our more defensive positions and getting re-engaged in the market.  Some models, like the income stock model, will see minimal changes in that we have held to the primary objective of the income model.  With income being our top goal we are not as concerned about the ups and downs of the holdings as long as they are maintaining or increasing their distributions over time.  It is worthy of note that it has been a long time since we have seen the yield on our Income Model of over 7%.

More often than not over my years advising clients, September and October are times of the year when we proactively do everything in our power to calm investor’s frayed nerves and help them maintain a level head.  We always know when the market lows have arrived or are close to arriving when we get the most “panic” or concerned calls.  This year it was Monday, August 24th.  We expected the market to rally, potentially drift slightly lower than the panic low and then rally into the end of the year.  So far the small caps have followed this path, but the larger companies look like they have reversed course and are now above the levels that they had initially rallied to after the selloff on the 24th.  It is possible to see another bout of selling, but when we see the markets rally to a new multi-week high after failing to make another multi-week low, we usually see the market continue its upward momentum.



How long will it be until we see new highs?  Only time will tell.  I sometimes find myself somewhat disappointed and impatient when the value of my accounts are not hitting new highs, but then I remember that this cannot always be the case and remember to focus on my progress over time.  On a few occasions we can point to periods where it seems we can do no wrong.  Other times we may feel out of sync, but if we focus on how we are doing compared to where we started and the progress we’ve made toward our goals then we feel much better.  Comparing how where we are now to previous records and highs will almost always find us wanting more, but by keeping our focus on our progress will help keep us out of the “gap”.  I learned a lot about the “gap” and how to stay out of the “gap” last year through a coaching group that I’ve been a part of for a while. Thinking about these things in a way that enables me to be happy more often has enabled me to get back to making progress more effectively and be a more enjoyable person to have around. I wrote a piece on this entitled Playing to Win by Changing the Rules (click to follow the link).  

When we are on top and breaking records, the view is much better than the down periods.  But it’s the down periods that enable us to enjoy the up periods that much more and also enable us to reflect and learn so we can make improvements in the future.




Remember how far you have come, not just how far you have to go.  You are not where you want to be, but neither are you where you used to be.

                                                                                                    Rick Warren


Data as of Oct 12, 2015


Joe Franklin, CFP, is founder and president of Franklin Wealth Management, a registered investment advisory firm in Hixson, Tennessee. A 20-year industry veteran, he contributes guest articles for Money Magazine and authors the Franklin Backstage Pass blog.  Joe has also been featured in the Wall Street Journal, Kiplinger's Magazine, USA Today and other publications.


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Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Franklin Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Franklin Wealth Management.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Franklin Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Franklin Wealth Management’s current written disclosure statement discussing our advisory services and fees is available for review upon request.  




Joe D. Franklin is President and Founder of Franklin Wealth Management.


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