HighTower Podcast: Collective Wisdom

Jimmy Hausberg, managing partner at The Hausberg Group in Beverly Hills, Calif., says that people staying safe at home during coronavirus but watching the market plunge and the economy grind to a halt are wondering if they're seeing the start of the next Great Depression, and they need to be working with their financial counselors to address concerns, stay calm and to develop a tactical plan that protects their short-term interests while also looking at the long-term potential for a rebound and the investment vehicles and sectors that will lead a comeback.

Long-time HighTower money manager Andy Morse of Morse, Towey and White Group in New York acknowledges that the market's response around the coronavirus pandemic is unlike anything he's seen in his long career, but he notes that it resembles past events enough for him to know that calm and patience and adhering to strategies pursued before real trouble started will pay off in the end. He notes that the market's big gains in 2019 triggered the purchase of hedges and fixed-income that have already softened the blow, and that time will leave investors ultimately talking about the future recovery as much as the current downturn.

Adam Thurgood, managing director and partner at HighTower Advisors Las Vegas, says that investors shouldn't be shaken from diversification and other measures just because it looks like it's not working when the market has a terrible day. Even gold moved down big in the market's huge drop on March 9, he notes, but precious metals -- as well as high-quality corporate bonds and other safe havens and diversifiers -- did their job and held up well over the market's entire 20 percent drop from a high on February 12 through the March plunge. You're not defending against a bad day, Thurgood noted, but against bad conditions long-term.

Roger Shaffer, managing partner at Shaffer Wealth Management in Alpharetta, Ga., says that the financial-planning process doesn't change during times of market strife, and notes that investors and their advisers must focus on process and their ultimate individual goals in times of uncertainty. By focusing on personal needs and where they are in their own lives -- rather than falling into the news cycle and reacting to what the market is doing -- Shaffer says individuals can more easily ride out and profit from market turbulence.

Matthias Kuhlmey, chief development officer at highTower Advisors, returns to Collective Wisdom after a lengthy absence to give his take on worldwide investing, noting that he believes interest rates will be lower for longer because the global economy can't digest high rates now or in the foreseeable future. With the economy facing deflationary pressure, Kuhlmey said investors must find compelling market valuations and balance it with the personal investment policies and philosophies that push forward in spite of slowing economic forces.

Matt Harris, head of the outsourced chief investment officer division at HighTower Advisors, said the market's is showing technical signs that mild trouble lays ahead, noting that the recent strength of the Standard and Poor's 500 index compared to its moving average -- where the benchmark is 11.5 percent above the average, which has occurred less than two percent of trading days over the last decade -- generally results in a two to five percent decline in two weeks to three months from when it first occurs.

Jim Ewing of Ewing/Cona Wealth Management in Marlton, N.J., says that the long current market rally appears to be overbought, which isn't necessarily a reason to expect a protracted downturn, but it should inspire investors to be more cautious. To that end, Ewing notes that many investor portfolios have grown fabulously over the last few years, gaining in size but moving away from their underlying financial plan. He suggests that investors wanting to respond to current market conditions look at rebalancing to see if it is both necessary and more likely to give them a comfortable portfolio for riding out the market's upcoming volatility.

Jimmy Hausberg, managing partner at The Hausberg Group in Beverly Hills, Calif., said that headlines like the coronavirus outbreak or even news of the presidential cycle shouldn't be ignored, but he noted that investors should use those events as a chance to review their portfolio rather than trying to capture short-term profits in ways that can derail long-term strategy. Hausberg's approach is defensive, more focused on avoiding the mistake rather than trying to enhance profits around news events.

Jake Falcon of Falcon Wealth Advisors discusses how investors should pay attention to the news, but should not be buying or selling the hot names that are ancillary to the headlines, for example companies that could profit from coronavirus, issues affected by political tensions, and even trendy newsworthy industries like cannabis and marijuana. Instead, Falcon urged opportunistic investors to use news events that create dips and downturns as buying opportunities for more mainstream securities.

Collective Wisdom revisits a recent discussion with Adam Thurgood of HighTower Las Vegas about how inventors can balance current risks with their own risk tolerance, noting that the proper ways to play defense right now could well involve investing internationally and adding gold and holding additional cash in the portfolio, rather than stretching for yield through fixed-income and dividend plays.