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PAX Investments: Second Quarter Commentary

Financial Planning, News Sep 24th, 2018 by: Darryl Lyons

There’s been a lot of financial news in the tabloids lately, and that can create a lot of uncertainty and worry: How is the market doing? Will there be another recession? Has the DOW recovered from that frightful day in February? How are PAX investments doing? What do I need to know?

Well, I’m going to tell you.

We have been uploading a video presentation frequently to keep our clients informed. Our most recent report, from Investment Planner Doug Richardson, CFP, covered some insights from the second quarter of 2018. In case you missed it, I wanted to share that information here.

There never seems to be a dull moment in today’s fast-paced world with non-stop breaking news. This past quarter has been marked by low unemployment, rising wages and increasing GDP, all creating a positive economic environment for business in general. And the near-term risk of recession continues to be low.

This is good news, but some of these themes have been overshadowed by talks of trade war between the United States and China, and the federal government rising interesting rates, all resulting in high volatility in the markets.

High volatility can result in emotional decision-making, which can be extremely dangerous as this kind of reaction has the potential to harm long-term performance. At PAX Financial Group, we believe that maintaining a well-diversified portfolio and focusing on long-term objectives are as important as ever in this emotionally charged environment. Make sure you don’t fall for the hype, and stay focused on what it is you’re trying to accomplish.

 

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This review follows up on our first-quarter report, which we posted from Investment Planner and Chief Investment Officer Brian Wing, CFP.

The first part of 2018 definitely started out with a bang.

On Feb. 5, 2018, the DOW plunged 1,175 points, the worst point decline in history. However, while these recent events were unsettling, when put in historical content, the news is a little less daunting.

Yes, we had the largest point decline the DOW had ever experienced, but in terms of percentages, it wasn’t the worst report we’ve seen.

On Oct. 19, 1987, the Dow dropped 22 percent. Today that would be the equivalent of a 5,300-point decline in one day. The recent 4.6 percent decline doesn’t even crack the top 20 worse daily percent losses for the Dow. The Dow was still up more than 22 percent for the past 12 months.

Unfortunately, volatility is a normal part of the market cycle. Financial advisors expect it. We just never know how long this volatility will last. And this can be hard for investors to understand. But at PAX, we’re confident in the fund managers that we’re using to navigate these inevitable storms that do come along. And like all storms, the volatility will pass.

We ask our investors to stay calm and continue to invest confidently.

This can be difficult, as we all remember the dot com crash, 2008’s financial crisis and other market milestones. Many retirement plans were set back years at times like these. But it doesn’t have to be that way. As humans, we need to fight our instincts when it comes to investing decisions:

  • We naturally feel safest with the crowd, so we tend to chase performance, which can be devastating if we’re not doing the things we need to do (like rebalancing, which is a technique that makes sure you maintain the proper risk levels).
  • We tend to panic and sell at the wrong time.
  • When we go through bear markets (periods of declining prices), we tend to stop buying stocks, but in fact, these are the times when risk is less, and we can make up ground by buying during bear markets.

A company called Dalbar, Inc. does an annual study about investor behavior. Sadly, they consistently find that individuals always underperform the market indexes, even when they buy index funds, since they usually panic and sell on the downturns, and buy and sell too frequently.

Most professional advisors have studied the markets and understand how to avoid the emotional mistakes that we’re all prone to. At PAX Financial Group, we even help protect against mistakes by individual advisors by having our investments managed by a committee. Our job is to help our clients avoid these emotional mistakes.

To help yourself, make sure you’re working with a Certified Financial Planner and rely on them when you’re unsure about the market. We also encourage investors to continually educate themselves.

We offer many resources on our website, from our regularly updated blog to workshops, helpful guides and books.

Being informed is crucial in good decision-making. Knowing what is happening with the market and your PAX investments can also provide peace of mind that your nest egg is being taken care of.

Again, we appreciate your trust in PAX Financial Group.

 

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This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. 

Darryl Lyons

Darryl Lyons

CEO and co-founder of the PAX Financial Group, Darryl Lyons has been a licensed professional in the financial services industry since 1999. A lifelong Texan, Darryl began his career in the financial sector just one day removed from earning his bachelor’s degree in corporate financial management and accounting at St. Mary’s University. Throughout his career, he has won awards for recruiting and development from Fortune 100 companies. In January 2007, he chose to begin and develop his independent practice. He joined Andres Gutierrez and Joseph Schuetze to form the PAX Financial Group. Darryl also served as the Chairman for Brooks Development Authority. Shortly after his service, Mayor Julian Castro, named a park “The Darryl W Lyons Park” in honor of his service. He was named to the 2010 San Antonio Business Journal’s “40 Under 40 Rising Stars,” which honors people making a difference in business and in the community.

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