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It’s All About the SAM

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February 1, 2016

So, how’s your SAM?

No, it’s not a novelty fast food burger. It means Strategic Asset Mix and it flows from knowing your goals and what you need to do to achieve them. I know when the market gets bumpy it’s a natural reaction to wonder and be a little nervous. It’s very easy to react versus staying the course to achieve your personal goals.

Last month I was at a conference in Toronto that featured keynote speaker Carl Richards. Many of you may have heard me praise Carl and his book The Behavior Gap. (Forgive his misspelling of ‘behaviour’, he can’t help it, he’s American). Carl is a financial planner and a regular contributor to The New York Times, and he’s particularly well-known for his simple and elegant illustrations. Below is one of his most popular drawings:

Carl Richards' fear/sell cycle diagram

If that feels familiar, it’s time to focus on your SAM. When the fear/sell part of the cycle is getting the better of you, consider turning down the noise, i.e. the financial entertainment stations like CNBC, BNN and all the other networks that make their money airing stories that will excite and scare you.

If you are sitting on cash, this may be one of the best times to consider the markets as an option. In 2008/2009 we had one of the absolute worst (in my lifetime) market crashes. Yet everyone I know that stayed invested recovered and surged ahead. I believe the same will occur this time.

So what should you do? Should you buy, should you sell?

Here’s my humble opinion: If you do not need to sell then I recommend that you do not sell. If you must sell, be sure to speak with your advisor and ensure you are selling the right class of assets for your plan.

So how about buying?

Well, an economist with CIBC tells us there is over $75 billion dollars sitting in cash. Another investment firm says stocks are undervalued by 11%. And the Royal Bank of Scotland says sell everything. More financial entertainment. My opinion is that it is a good time to buy. Is it the best time? I don’t know. However, I do NOT think you should be buying without speaking with your financial advisor. I encourage you to make sure this aligns with your long term plans and making sure you are in for the long term.

A great first step is to buck the emotional trend in Carl’s illustration above. Recognize that your emotions may be part of what leads you to make decisions and then ignore them. Don’t buy high and sell low, instead stick to the plan.

As I mentioned in my first e-newsletter, our annual retreat inspired me with a sense of purpose and a desire to be more regularly in contact with my clients. One of the things I want to help my clients with is building a sustainable family legacy.

Watch for my March e-newsletter where we will speak to the changing environment in the life insurance industry. Pretty exciting, I know you can hardly wait!


Founding Partner | Financial Planner
Michael Caldwell has been helping people sort through their money issues since the early 1970s. He has a way of talking numbers that just makes sense. Combined with wry humour and a curious mind, Michael writes about current topics of interest to the clients that he works with in his practice at Caldwell Wealth & Estate Advisory.

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