•   |  (626) 449-7783

Blog

Articles by Alan & Akemi

Money Lessons from my Father

My father, Alan Kondo, has always been one of those “teach a man to fish and you feed him for a lifetime,” kind of guys.  I hated it growing up!  I just wanted my “fish for the day.”  I realize now that he was investing in my financial knowledge and well-being; teaching me habits that he hoped I’d carry through adulthood.  As a parent, I find myself echoing him, telling my boys, “I’m not giving you a car, you’re going to earn it!” Like my father, I find more excitement on the giving end of these lessons, rather than the receiving end.  Here are some of the best pieces of advice my father gave me over the last 40 years.

Pay Yourself First

Growing up, I always had a “job” of sorts.  When I was 10, I got paid $0.05/envelope for folding, packing and licking shut envelopes for my mom’s mailing – I used it to buy ice cream.  When I was 16, I had a job at a local restaurant to-go counter. To this day, I still can’t stand the smell of BBQ baked beans, but I was able to buy a used Honda with my restaurant earnings.  When I got my first “real job” out of college, I itched to think what I was going to buy next!  My dad sternly told me to Pay Yourself First.  I had no idea what this meant. Paying Yourself First means the first bill paid each month should be to yourself in the form of savings. The remainder of your paycheck can be used to pay groceries, bills and entertainment. 

With my father’s help, I opened my first 401k savings account, and I saw my paycheck shrink by 30%. My father explained that the earlier I saved for my retirement, the sooner retirement would come. That’s because time is on my side, and the retirement savings will have compounded growth as dividends and interest accumulate and the stock market grows. Although a stock market pull back like the Great Recession or Covid-19 can be detrimental to an investment portfolio in a short window of time, over a working career, those dips can be offset by recovery and future market growth. Saving early can keep retirement goals on track for the long-haul.

Paying Yourself First also means having an emergency fund of six months to one-year of living expenses in a cash or CDs.  That way if something unexpected like Covid-19 happens, you have a safety net to hold you over, and you don’t have to lock in losses by selling investments that are temporarily priced low. 

 Only Take Necessary Risks

When it comes to my outlook on risk, I’ve had several life phases. As a child, I was afraid of crossing the street. As a teenager, I thought nothing could hurt me. As an adult, I was wise enough to ask for advice.  When I asked my father how to invest, he quoted the adage of moderation. Risks are sometimes necessary, but don’t take risks for the excitement with money that you need.  In other words, don’t go to Vegas with your rent money.

For a retirement portfolio, diversification is one of the tried and true methods for capturing market gains, reducing downside risk, and weathering market downturns to achieve a positive long-term return. In the history of the stock market, there is no 10-year period where a diversified portfolio would not yield a positive return, even including the Great Depression.  Investing in flashy stocks like Bitcoin can have a big return, or it can flop, so you should only invest in higher risk investments with money you can stand to lose. 

Don’t Live in Fear

Having lived through the magnitude 6.7 Northridge earthquake in 1994, I grew very weary of earthquakes at one point.  I told my father, “Why would anyone buy a house, if an earthquake is going to just crumble it to pieces one day?” My father validated my fears. Emotions are valuable in helping us to survive, thrive and avoid danger. However, strong emotions should be avoided when making important financial decisions. That’s because emotions can drive you to act quickly or irrationally out of fear or greed.  For example, many people cashed out of the stock market this March, when the Dow was down 34%, locking in losses and missing out on the subsequent 31% bounce back in the weeks that followed.

Instead, when making financial decisions, try to focus on research, metrics and analytics.  Numbers don’t have emotions and can help put things in perspective.  Finally, sleep on it.  Sometimes taking a break or stepping back can help you to see the bigger picture.  

We Are Only as Strong as Our Community

My father grew up in Toronto where Japanese were discouraged from congregating post WWII.  When he came to California, he was amazed by Japantown in San Francisco and Little Tokyo in Los Angeles.  He was also inspired by the Japanese Americans’ abilities to band together with all disparaged communities to create positive social change. Since my father did not grow up with these communities, he never took it for granted.

Growing up, I enjoyed our visits to Little Tokyo. I loved spending my weekends eating at the Tofu Festival, climbing the rocks in the JACCC courtyard, getting origami paper in the Village Plaza, and attending obons in the hot July weather. As an adult, I realize these experiences were fostered by a community in constant jeopardy. While I feel young and powerless, it is now my opportunity to support the community that raised me. Perhaps I can teach someone interested “to fish”, or I can stand up for someone who is unheard. In an environment where tax breaks and financial grants seem to go to the wealthy, I can write letters, vote, and donate to help local businesses make ends-meet.  Every bit of effort counts, and our community is counting on us. Sometimes it makes sense to invest in something with intangible returns.

--------------

Thank you and Happy Father’s Day to all the fathers, uncles, grandfathers, and mentors who devote years of thankless lessons on to “deaf ears.”  I was listening Dad – thank you!

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Kondo Wealth Advisors, Inc.  employees providing such comments, and should not be regarded as a description of advisory services provided by Kondo Wealth Advisors, Inc.  or performance returns of any Kondo Wealth Advisors, Inc.  Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Kondo Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

Continue reading
5 Hits

Our New Covid-19 World

As we struggle to re-open the country, many are steadfast on getting things “back to the way they were.”  It’s an ideal goal, but in many ways, Covid-19 may have already changed us, forever. 

Some economists say the pandemic accelerated us five years into the future from a technology perspective.  Companies that were once reluctant to adopt technology now find themselves devoting capital into IT with no disparity. In-person meetings with doctors, CPAs and financial advisors are now being done online; sometimes more efficiently, as we eliminate commuting, parking, and other related frustrations.  Corporations are also finding meetings that required flights and hoteling can be hosted online instead, for a fraction of the prior costs.  That can have ripple effects, boosting the future revenues of online meeting platform providers, IT support services and rapidly developing the telemedicine space. It may also mean long-term decreased revenue for airlines, the auto industry, oil and gas, and hotels, as business travel is reduced to an as-needed basis.

Many continue to work through Covid-19, but in new ways. Businesses who were reluctant to change the traditional model of working from an office daily are now finding that employees can be trusted to work from home. I call it the first win-win-win for society in a long time. Employers are able to “reduce their footprint” which is a public relations, green-sounding way of saying, cut their over-head costs.  By having more employees work from home, employers can immediately reduce their office lease expenses, land lines, utilities, and so-on. Employees who need to come into work occasionally can “hotel” or check-in to a day-use desk, allowing companies to rent smaller office space for their rotating work force. The second win is for the employee who gets to work from home occasionally or permanently. In busy metropolitan cities, the avoided commute time can be invaluable, adding tremendously to quality of life. For your wallet, working from home can also equate to reduced auto, insurance, maintenance and gas costs. Given these benefits, a recent study noted currently unemployed people might be willing to reduce their target starting salary for new jobs where they are allowed to work from home; an indirect but definite win for employers. The third win is for our environment. Los Angeles has notoriously polluted air, but a recent study by IQAir, a global air quality company based in Switzerland, reported LA saw some of the cleanest air of any major city in the world during April.[i] 

The loser in this win-win-win scenario is the commercial real-estate industry. It is predicted the landscape for commercial real-estate may be permanently changed. In past market downturns, real-estate was an inversely correlated asset that provided protection when the stock market was down.  However, in our post Covid-19 era, commercial real estate may not prove to be a safe haven. Many corporations plan to “reduce their footprint” by 30% in the coming years, providing instability in the commercial real estate space. We already saw the collapse of the once highly anticipated WeWork shared office space provider. Large retailers in shopping malls and the food service industry may also begin to reduce consumer facing locations as people acclimate to shopping online and prefer to use outdoor space for socialization and networking when social distancing restrictions are lifted. In essence, we as a society are changing, and business is rapidly evolving to survive in the “new world.”

Our education system is rapidly changing also.  Many local schools and universities originally viewed school closures as temporary until the Covid-19 risk had passed. However, institutions realize that Covid-19 may reemerge during the flu-season and so it would be prudent to plan how to educate remotely again in the near future, should the need arise. However, this is also eye-opening to the philosophy of education. Ivy-league university lectures are no longer constrained to the size of the lecture hall.  Rather, these highly regarded professor’s lectures can be recorded and live-streamed around the world for many students to participate in. This could be the beginning of a globalized education platform, and dare I say it, lower future education costs? 

A larger and murkier Covid-19 issue is the increase in government indebtedness related to sustaining the economy. The US government was already running a disturbing National Debt of $23.3 trillion prior to the pandemic. That figure has increased to $25.1 trillion and counting due to back-stops put in place to keep the economy afloat.[i] Prior to Covid-19, it was predicted under the existing planning provisions, social security and Medicare would be unfunded by 2035.[ii]  The path ahead is complicated and political, but it is hard to imagine there will not be some consequences to the US citizens and corporations in the form of higher future taxation to solve this daunting problem. Therefore, many financial planners and estate planners are determining ways to mitigate future taxation or pay taxes at current rates in preparation for the fearful road ahead.

Finally, in our battle to fight Covid-19, many have lost loved ones to this deadly disease. In that loss, we may find a new normal, different strength, and eventually new joys, but we will never go back to the way we were.  In mourning, perhaps we can remember to be grateful for the things we almost took for granted; our health, our loved ones, our amazing medical providers, grocery store workers, package delivery drivers and garbage truck drivers whose daily tasks keep the world going. Instead of focusing on differences of opinion, we may choose to come together in community and support one another through adversity. Covid-19 is not yet behind us, but it is already making a permanent impression on us and our future.

Wishing you all continued health and safety.  


 

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Kondo Wealth Advisors, Inc.  employees providing such comments, and should not be regarded as a description of advisory services provided by Kondo Wealth Advisors, Inc.  or performance returns of any Kondo Wealth Advisors, Inc.  Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Kondo Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

 

 

 

 
Continue reading
31 Hits

CARES Act Highlights

 CARES Act Highlights

 These past few weeks have been a whirlwind of activity! It’s hard to keep up on the news, but one of the most significant pieces of legislation in our time may be the CARES Act or Coronavirus Aid, Relief and Economic Security Act. The bill passed on March 27th, allocating $2.2 trillion dollars in aid to address the economic fallout due to the COVID-19 pandemic. This is the largest economic relief bill in US history. Key elements of the CARES Act include:

  • $532 billion for large businesses and local governments
  • $377 billion for small businesses
  • Estimated to total $300 billion in direct payments to families in the form of $1,200 checks ($2,400 for couples) plus $500 per child to individuals earning $75,000 or less ($150,000 for couples)
  • $260 billion in expanded unemployment benefits
  • $150 billion in direct aid for states and municipalities
  • $125 billion for hospitals and other health care providers

 To help sort through the mountain of information on the CARES Act, we highlighted some of the retirement and financial planning components that might be useful to you or your loved ones.

2020 RMDs Waived

Similar to the Great Recession in 2008, retirees are allowed to forgo or waive their Required Minimum Distribution (RMD) for the 2020 year from IRA, 401(k), 403(b), 457(b) and Inherited IRA accounts. The RMD distribution amount is based on the value of the retirement account at December 31st of the previous year. Given investment accounts have declined in 2020, the amount of the RMD as a percentage of the current account balance would now be larger than anticipated. Taking an RMD when the account value is down also forces the investor to “lock in losses” by selling equities when they are valued lower. This new provision to waive RMDs will allow retirees to keep the funds invested and hopefully regain value as the market recovers. 

If you’ve already taken your 2020 RMD, you are allowed to write a check and reverse the distribution within 60 days. If tax withholdings were taken from your RMD, you’ll need to refund your retirement account with the net balance you received, plus the tax withholding that was sent to the IRS to qualify as a full reversal. You’ll be refunded the initial IRS tax withholding when you file your 2020 taxes. If you refund your retirement account with the net of tax balance only, the IRS taxes withheld will be assessed to you as income for the 2020 year. 

Unfortunately, completed 2020 RMDs for Inherited IRAs are not allowed to be reversed, no matter how many days have passed since the distribution. Since this is a unique new rule and there are lots of exceptions and exclusions, you may want the assistance of a financial advisor with this transaction.

Retirement Plan Loans

Under the CARES Act, affected individuals may withdraw money out of their IRA or company retirement plan to offset expenses resulting from the COVID-19 pandemic.  The 10% early withdrawal penalty for those under age 59 ½ is waived. Additionally, the 20% Federal tax withholding from company sponsored retirement plan (i.e.: 401k) distributions is also waived. To fully avoid taxation on the COVID-19 distribution, the recipient can repay the funds into their retirement account over a three year window. If the individual does not plan to repay, taxation on the distributions can be split evenly over 2020, 2021 and 2022 to help ease the tax burden. However, if your income will be significantly lower in 2020, and you prefer to pay the tax on a retirement account distribution all in the current year while your tax bracket is lower, that is also allowed.

SBA Paycheck Protection Programs

In an effort to flatten the curve, many businesses have been forced to close doors and comply with the Safer at Home mandate. As a result, businesses large and small, are struggling to keep employees on payroll and cover unforgiving overhead expenses like rent and utilities. The Paycheck Protection Program (PPP) is a Small Business Association (SBA) loan program designed to help address these needs.

On April 3rd, SBA opened the application process to small business owners and sole proprietors. On April 10th, independent contractors and self-employed individuals were also allowed to apply. Small and medium-sized businesses are defined as companies with 500 or fewer employees, including sole proprietors, self-employed individuals and independent contractors. 501(c)(3) non-profits also qualify.

Approximately 11,000 authorized US lending institutions including banks, credit unions and Fintech lenders are accepting the applications for loans. It is recommended that you reach out to your existing business banking relationship to inquire of a loan for more efficient processing. The application is short, but requires 2019 payroll supporting documentation and 2019 IRS Quarterly Payroll Tax Reports (forms 940, 941 or 944 as applicable). Therefore if you plan to apply for a loan, reach out to your CPA and payroll provider early to gather the necessary information. 

Federal guidance indicated that in eight weeks, if businesses have spent the entire loan amount on qualified business expenses, the loan converts to a grant.

A great resource for organizing your financial data in preparation of the loan process is the AICPA PPP payroll calculator, available for free online.

https://www.aicpa.org/content/dam/aicpa/interestareas/privatecompaniespracticesection/qualityservicesdelivery/ussba/downloadabledocuments/ppp-loan-calculator-non-seasonal-operational-in-2019.xlsx

These are difficult times, but I believe challenge allows us to demonstrate grace and humanity in a way we worried was lost. I am reminded daily how much I have to be grateful for. We will make it through this together; better, stronger and more united than we began. I want to give back the kindness and support bestowed upon me. If we can help be a conduit of information or a financial sounding board in a volatile stock market, please let us know. We want to help.

 Sources:

-       Buckingham Strategic Partners CARES for Retirement Accounts FAQs

-       AICPA SBA Paycheck Protection Program resources for CPAs

https://www.aicpa.org/interestareas/privatecompaniespracticesection/qualityservicesdelivery/sba-paycheck-protection-program-resources-for-cpas.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=03Apr2020

 

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Kondo Wealth Advisors, Inc.  employees providing such comments, and should not be regarded as a description of advisory services provided by Kondo Wealth Advisors, Inc.  or performance returns of any Kondo Wealth Advisors, Inc.  Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Kondo Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

 

 

 

 

 

 

 

Continue reading
30 Hits

Setting Stock Market Records

In the last two weeks, we’ve made new records in the stock market: Biggest one-week drop, Biggest one-day gain, and Biggest one-day loss in the history of the stock market, in chronological order. Those records tell us that consumers, and even the know-it-all day traders, don’t know where the bottom of the market is. What started as fear of the coronavirus has turned into fear of global economic slowing and longer-term anxiety of a US recession. 

Uncharted Territory - Stock Market Records Set in March 2020:

-       First time the Dow dropped 2000+ points

-       First time Circuit Breaker rules used since 2013 (when the stock market trading is temporarily halted due to a dramatic decline in value)

-       30-year US treasury yield dipped below 1%

These days, it doesn’t take much to trigger panic in a market already on edge. On Monday, the US stock market trading was halted shortly after opening due to the market reaching a benchmark drop of 7%. The manic Monday drop in the stock market was due to failed negotiation talks between Saudi Arabia and Russia regarding oil production that triggered an all-out price war. This caused a plunge in oil prices of 30% that rippled across the remainder of the stock market quickly. The decrease in oil prices from roughly $63/barrel in April 2019 to below $30/barrel during Monday trading created increased pressure on the credit market. Energy companies, such as oil producers, are the largest issuers of junk bonds. With their future revenues in limbo, the value and credit quality of their bonds became even more unstable. As evidence, investors flooded into the security of government-backed debt and the 30-year US Treasury yield traded at 0.99% for the first time in the history of the stock market. 

The White House followed up with market stimulus measures. On Tuesday, President Trump announced payroll tax breaks for corporations and employees through the rest of the year. Trump also continued to put pressure on the Fed for further interest rate cuts. This comes on top of the $8.3 billion spending package President Trump signed in early March to combat coronavirus through vaccine research and medical support to states currently dealing with COVID-19 patients.

Ironically, this week marks the 11th anniversary of the bull market which began on March 9, 2009. From the last market high on February 19, 2020, the Standard & Poor’s 500 (S&P 500) is down approximately 12%. If the index drops 20%, the “correction” will officially be labeled a “bear market” and we’ll have ended our bull market streak in February.

Taking a step back to reflect, since the start of our bull market in March 2009, we’ve had seven corrections of 10%+ decline in the stock market. Those corrections averaged to a decline of 15% and lasted 78 days. Examining further back to 1990, the average correction increases slightly to 18.8% over a span of 83 days. 

No one truly knows if we are near the bottom of the stock market decline or if there are additional record setting days to come (good or bad). As companies get ready to post Q1 results, I would not be surprised to see declining earnings across the board due to shifts in consumer behavior related to COVID-19. However, those lower financial results are likely already priced into the stock value via the negative trading days recently witnessed. Often, because the stock market is so forward looking, the equity markets begins to turn around before we’ve seen the worst of the health epidemic at hand. That’s because when we’re in the midst of gloom, the market is fixated ahead and already sees the light at the end of the tunnel. 

Fundamentally, the US economy is strong. We’re simply at the end of the market cycle and many have forgotten that we need some down market years to ensure stock prices don’t stray too far from the true valuations of the companies they represent. Our advice remains consistent. These volatile trading days highlight the resiliency of diversified portfolios and the need for a measured amount of fixed income to offset equity volatility. Furthermore, systematic rebalancing in up and down markets ensures your investment portfolio adheres to the original target customized to your risk tolerance. As Schwab’s Chief Investment Strategist, Liz Ann Sonders stated this week, “Those tried-and-true disciplines are the closest thing an investor can get to a ‘free lunch’ in this crazy business.”

Age-old investment advice:

-       Neither “get in” nor “get out” are investment strategies...they represent gambling on moments in time, when investing should ALWAYS be a process over time.

-       Panic is not an investment strategy.

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Kondo Wealth Advisors, Inc.  employees providing such comments, and should not be regarded as a description of advisory services provided by Kondo Wealth Advisors, Inc.  or performance returns of any Kondo Wealth Advisors, Inc.  Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Kondo Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

Continue reading
69 Hits

CORONAVIRUS: THE OTHER SHOE HAS DROPPED

The novel coronavirus, now named COVID-19, has been causing fear and panic around the world, not to mention wreaking havoc on the stock market. Given the virus is no longer contained within Asia and is poised to be a global pandemic, the ramifications on the stock market (which is always forward looking) have been extremely negative.  As of Friday, 2/28, the Standard & Poor’s 500 (S&P 500) dropped approximately 300 points or 9% year-to-date. From the peak of the stock market in mid-February, the S&P 500 is down over 430 points or nearly 13%, officially putting us in “correction” territory.[i]

Looking back to the 2000s, we had three health epidemics that also came out of China; SARS, avian flu, and the swine flu. The average S&P 500 stock market drop due to these diseases was 15%. However, a year later, the S&P 500 was up an average of 25%. Similarly, with the Ebola virus and Zika virus, the S&P 500 dropped a lesser 10% and rebounded 14% thereafter. This could hint we have more downside to come.

The decline in the stock market over the last week has proven to be the fastest drop in history, according to Deutsche Bank Securities. There have been 27 market corrections since World War II, but the average decline of 14% was spread out over a window of four months.[ii] Some feel the rapid decline was due to the fact that stock valuations have been at their highest since 2002, making the market ultra-sensitive to a geo-political element like COVID-19.

We have been at the end of the longest Bull Run in the history of the stock market for years. In fact, economists predicted the end of the growth market cycle in 2018. However the Tax Cuts & Jobs Act became effective in 2018, giving corporations a 14% tax cut, or a synthetic boost to their bottom line that kept the stock prices buoyant. In 2019, Fed Chairman, Jerome Powell, initiated three interest rate cuts which eased monetary supply and boosted the stock market further. For two years, the market stayed artificially high, even though it was apparent the economy was slowing. As a result, stock traders have been skittish, constantly waiting for the other shoe to drop. This relentless unsettled feeling has coined our last market surge as the Most Hated Bull Run in the history of the stock market.

COVID-19 may be the catalyst to initiate the overdue market contraction the government has been trying to delay. We've never seen the market decline so rapidly due to a medical epidemic alone. To substantiate that, the declines we’re seeing in the stock market are not limited to companies who depend upon imports from China or the tourism industry. In this market decline, we’ve seen businesses lose value across the board. Companies like NBC Universal and Uber (who no longer operates in China) were also down, indicating the larger market may have been overpriced and in need of correction.  

Should Retirees Cash Out?

Some have said, “I’m too old to go through another 2009,” and their anxiety is understandable. However, retirement is not the end-all for an investment portfolio. In fact, many can spend 25-30 years in retirement, which means your investment portfolio needs to be invested for that time frame also. Whether the market is down for a short-period due to the coronavirus, or a long time due to a market cycle, investors should not cash out their portfolios for an event that will likely be ineffectual to a long-term investment strategy. Likely, the market will recover before the end of the epidemic, causing those who cashed out to buy back at a price higher than they sold for.

Take another long-term asset like your house for example.  Did you sell your house when the housing market was crashing in 2009 in hopes of staving off paper losses?  Did you plan to buy your house back just as the market began to recover to make a bigger profit on your investment? No! You plan to live in your house the rest of your retirement, so whether the house is valued lower in 2009 is irrelevant if it provides you shelter the rest of your retirement years. The same can be said of a well invested portfolio. It may be down some years, but it will recover and be on the plus side as long as you don’t make knee-jerk reactions.   

On the contrary, you should consider a distribution when you have a set expense approaching in the next one to two year window. For example, if you are looking to buy a house, start that overdue bathroom remodel, or put a child in college this Fall, take the funds allocated for that expense out of the market so that you aren’t forced to pay a bill right when the market is down, locking in losses.

How do I prepare for the market ahead? 

Market timers tout that they can sell now, before the bottom hits and get back in, just as the market starts to turn around. In theory, that sounds like a great strategy, but is rarely instituted effectively in practice. To time the market, you have to be right two times: You have to know when to get out of the market and when to get back in. Statistics have shown market timing produces lower average annual returns than a diversified portfolio.

Diversification is one of the most effective strategies for dealing with volatility. Inversely correlated asset classes are paired together so that if one sector of the market is down, another sector of the portfolio is up, offsetting losses. It is one of the most effective ways to reduce losses during a market downturn so you can recover quicker when the market improves. 

Rationally speaking, you have two choices: 

1.)  Ride out the market downturn (short or long) and experience the next rise. You will be relieved that the markets were not down permanently for the first time in the history of the stock market!

2.)  If the market volatility gives you angst and you cannot sleep at night, meet with your Certified Financial Planner™ to determine if you need a permanent reduction in your portfolios risk exposure. Making a prudent change could save you from making a panicked decision with long-term financial damage.

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Kondo Wealth Advisors, Inc.  employees providing such comments, and should not be regarded as a description of advisory services provided by Kondo Wealth Advisors, Inc.  or performance returns of any Kondo Wealth Advisors, Inc.  Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Kondo Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

 

Continue reading
116 Hits

EDUCATIONAL WORKSHOPS

2020 SCHEDULE 

 

Investing: What to expect in 2020

Saturday, January 25, 2020

9:00 a.m. - 11:00 a.m.

Ken Nakaoka Center*

1670 W. 162nd St.,

Gardena, CA  90247

*not sponsored by the City of Gardena

 

INVESTING DURING THE NEW NORMAL

Saturday, June 13, 2020

9:00 a.m. - 11:00 a.m.

Zoom Webinar

(Zoom link to be sent via email upon RSVP to info@kondowealthadvisors.com) 

 

 

 

Contact Us

300 North Lake Avenue, Suite 920
Pasadena, California 91101
Phone: (626) 449-7783
Fax: (626) 449-7785
Email: info@kondowealthadvisors.com

Newsletter Sign Up