Investment Consultant, Gary Goldberg Financial Services
It’s a question I ask at each of my monthly educational seminars: What is the function of a good money manager?
It’s a simple question, but the most frequent response – to make the client money – shows how misunderstood the role can be. While money managers certainly are there to make money for their clients, the key service is right there in the name: they manage the money, not just by growing it, but by protecting it. Anyone can grow their next egg in boom times, but a great manager will save their clients from losing money when markets fall. Money managers of course manage wealth, but they also manage against the risk that exists in both good times and bad.
Experienced investors understand that markets go through cycles, that bull markets will inevitably turn bear and vice versa. Last month, I highlighted the fact that we’re more than six years into the current bull market, a measure of how remarkably resilient the market has been. In fact, until recently, the S&P 500 hadn’t undergone a correction – a 10 percent drop from a market peak, which here refers to an all-time record high – since 2011. That’s an extremely long time by historical standards.
Currently, markets are going through volatile times, an environment largely driven by waning growth in China. It’s understandable for individuals to be worried about their money if the news is alarming and daily market swings seem excessive. This is when money managers embody their real function. By reviewing the situation impartially, focusing on the facts and numbers, they can help their clients not just mitigate risk, but profit from it. Everyone has heard that they need to “buy low and sell high,” but it’s easy to be overwhelmed by emotion and do the exact opposite when it’s your money in question – it’s natural to feel most comfortable near highs and least comfortable near lows, even if those are the worst places to enter and exit a market.
Clients of Gary Goldberg Financial Services are part of a disciplined process that emphasizesdiversification based on time horizon, sectors and asset class. The first thing we tell prospective clients is that any money they expect to need in the next three years should be kept in cash or cash equivalent. This allows us to focus on growth and risk management in all types of market, helping them meet their intermediate and long-term goals.
Christopher Hanly is an investment consultant with Gary Goldberg Financial Services in Suffern and can be reached at (845) 368-2907 or email@example.com