““You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” Peter Lynch
We discussed two issues in our reflection section this month. The first was the concept that market volatility might impact your view of your retirement but that it might have less impact than you expect. One reason is that you typically do not liquidate your portfolio the day you retire so the value on that date is only one date in, hopefully, a series of days of retirement. You must consider the fact your portfolio generates income that is not impacted by the daily price of the portfolio. The income your portfolio generates can cover much of your retirement cash needs. The second theme was the goal of affordable housing is a double-edged sword. If new housing is cheaper than existing housing, then the price of existing housing will have to decline. I don’t think any political party’s platform told people the value of their home should decline. I want my kids to have access to affordable housing so I would vote for any of the parties, but I do not want my store of value, my house, to decline in value. Like the two old men in the political ad, I might want change, but I don’t want the value of my house to change in a negative way.
We were not very active with client accounts this month. We take a longer-term view and as we mentioned last month it is difficult to make changes given the almost daily changes to tariffs. Our portfolios had limited direct exposure to tariffs, no steel or auto stocks. Our portfolios benefited from the rise in gold prices but were hurt by declines in the energy sector. That is part of portfolio construction. As discussed in our reflection section, we focus on the income the portfolios generate from dividends and interest.
