Last month my post was titled "We Will Bounce Back," and for the most part, we have. Admittedly, it did not take long but I am not declaring victory.
George W. Bush infamously did so in his 2003 "Mission Accomplished" speech. After which, there was an escalation in fighting and the majority of the Iraq War casualties occurred. It has become a sort of cautionary tale on counting chickens before they are hatched.
No, I will not make the same mistake either in word or thought. The fact is that the markets have rebounded mostly because there have been some pauses on international tariffs, most notably with China, and the markets have taken that as a positive sign.
Certainly, reaching mutually beneficial agreements with all our international friends and trading partners would be ideal, but that has not been accomplished in any fixed or lasting way. At most, we have achieved a sort of economic cease fire.
While that is something of value, to be sure, it is not a permanent solution. Trade negotiations can break down, international disagreements can remain stubbornly intransigent, and old grievances have a way of bubbling to the surface. I am not at all convinced we are out of the woods.
A great man of the past century once said, "Do not pray for an easy life, pray for the strength to endure a difficult one." He meant that life would likely be hard whether we wanted it to be or not, so we had better be ready. It has also been said that God helps those who help themselves. I believe that.
This concept can be applied effectively to investing. Instead of constantly living in fear of a market downturn, why not seek to construct an investment mosaic such that many potential life outcomes are solved for in advance, to the extent possible.
One of the ways we can accomplish this is by diversifying not only within assets classes, but among them. If someone suggested, you put all your money into a single stock you would rightly be skeptical. This is obviously scandalously bad advice.
However, we often think nothing of having all or most of our money invested only in U.S. equities (stocks.) The problem is that when the market crashes it generally does so on a broad scale. Which, I suppose, is why we call it a market crash and not a sector or industry crash!
It turns out that in times of economic uncertainty, recession, market correction, etc. there have been asset classes that not only did not fall but performed admirably. Telling folks who just made 10% or more in the stock market that they should migrate a portion of their assets/savings or both to alternatives is not always met with warm agreement, to say the least. But, when the difficult times begin, they almost always wish they had done so.
How do we circle the square?
To begin with, we acknowledge that we are human beings, and it is natural to want only the wins and none of the losses. As a friend often puts it, "Everybody wants to go to heaven, but nobody wants to die." We are also intelligent, reasonable adults so we know that it does not work that way. The first crucial step is understanding and accepting that reality does not care what we want. What counts is what we do.
The second step is understanding and accepting that as we age, our investment philosophy must evolve. Not losing our shirt, rather than the desire for outsized gains, should become the engine that drives our investment and saving decisions.
The third and most challenging step is attempting to understand and accept what we will want from our assets when we are in our 70s, 80s, and beyond. Hint, we will want them to go up steadily, not lose significant value during downturns, and to last the rest of our lives.
Last month my post was intentionally optimistic as there was so much negative news and conversation about the market and the economy. This month, I am pumping the brakes on the current enthusiasm because, in my view, there are still a number of hills to climb before we can breathe a little easier.
In closing I will paraphrase a t-shirt that was popular when I was a kid, tough times don't last, tough portfolios do.
If you would like help in constructing a durable and diversified financial mosaic that can work well over time and provide a feeling of well-being, please call me at (732) 844-3000. I am here to help.
Scott R. McGimpsey June 22nd, 2025
Certified Financial Fiduciary®
This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Neither Cetera Advisor Networks LLC nor Scott McGimpsey is engaged in rendering legal, accounting, or other professional services. If such assistance is needed, the reader is advised to engage the services of a competent professional. 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, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm.