00:00 Speaker A
Stocks are surging today after the US and China agreed to temporarily lower tariffs for 90 days as they work out a final trade deal. We want to talk about how investors should think about the rally within their portfolio. Here with more, we’ve got Preston Cherry, Concurrent Wealth Management founder and wealth advisor. Preston, good to have you on the program with us. So, what do you do with a day like today coming off of a Sunday, two-day meeting concluding here where you have some easing in the pressures for both sides and hopefully some of the cooler heads prevail?
00:46 Preston Cherry
Absolutely. I think you just continue your contributions over time. So investors have a little bit more confidence now with the trade announcement, and nobody likes hearing more of the same during corrections or crashes, but more of the same is good for rallies. So continuing contributions during a rally helps dollar cost averaging with so business owners with paychecks and also professional paychecks, continues that investing over time and buys at highs and lows points and smoothing out that price that cost basis over time.
01:32 Speaker A
What’s the number one question that you receive from clients when things are rosy, bright versus when things are a little bit more tumultuous, unpredictable perhaps, and they’re trying to figure out, okay, what should I be doing with my own portfolio strategy at this juncture?
02:03 Preston Cherry
Yeah, sure. So when times are bad, the question is, should we go to cash? And when times are good, is should we hold our cash and wait for the next correction or crash? So it’s all surrounding around cash and cash is good for emergencies, liquidity purposes, lifestyle choices, and during times of uncertainty. That said, cash doesn’t earn the market returns, historical market returns, inflation eats up that cash. And if you continue to stay invested, then you can capture the best performing days historically after low historically performing days.
03:00 Speaker A
With all of this in mind, are you too late if stocks are already rallying on a day like today?
03:13 Preston Cherry
Uh the worst behavioral finance behavior is FOMO. So fear of missing out. Actually, uh last year, there were 57 new highs in the market. So this question came up often, uh do we hold our cash and wait for the next crash? Well, with 57 new highs last year, there were 62 new market highs in 2017. Uh so when the market has good momentum and there’s not as much uncertainty in the market and the economy, then the market historically tends to keep the momentum and and go higher.
04:20 Speaker A
And so with that in mind, how do you kind of best gauge what your exposure should be coming out of or even in the midst of times where the markets are more volatile and how you start to selectively pick areas where for the long term you feel comfortable being invested in?
04:47 Preston Cherry
Yes, so you know, folks should always consider their risk capacity, their risk tolerance, and their goals, and have an intentional investing plan in order to help them maintain that good investing behavior. And also too, there’s opportunities in the market. For example, uh we’re looking at Delta. Uh Delta’s consumer discretionary. During times of uncertainty, then folks are looking at their pockets. They’re going to pull back their travel budgets, and Delta did not uh list any guidance in their last call and their market, their stock went down about 25 plus percent. Now you have new tariff announcements on the positive side, and folks are saying, “I have a little bit more confidence to re-engage with my budgets,” and now Delta’s up 25-27%.
