(630) 948.3330 info@lenityfinancial.com

Taking a Peak Back to Get Ready for What’s to Come

Anyone remember 1999? You might be thinking, “Yes, that year we had one of the ‘best ever’ New Year’s Eve parties in anticipation of Y2K!” There was so much hype and consternation over what would happen to our computers, and yet, with much fanfare, Y2K was ushered in; and the concerns over the potential computer meltdowns soon forgotten. The Stock Market (as measured by the S&P 500 Index) had an unprecedented over 20% return for 5 years in a row running up to 2000.

It’s easy to forget the significant preparation that occurred prior to Y2K. Computers were updated and upgraded across the nation and the world, thus facilitating the smooth computer transition. We think this same type of preparation and review should be given from time to time to your money.

Do you remember what happened after Y2K? It’s been a roller-coaster, but let’s break it down with hindsight and see where it leads…

Shortly after 2000 (Y2K) though, the markets’ amazing late 1990’s rally ended with 3 years in a row of negative returns. At the time, those years…2000, 2001, & 2002 were being compared to the “Great Depression.”

Today, stock markets are at all-time highs. Since March 9th of 2009, the S&P 500 Index is up over 270% through September 2017.

Juxtapose that to the period of time before Oct 9th 2007 (the beginning of the last bear market and the Great Recession) where the run up was just over 100%. And, the aforementioned late 1990’s Bull Market, which ended March 24th 2000, who’s run up was also just over 100%.

The accent to today’s highs has been smooth. There hasn’t been more than a 5% dip in the markets in the last year and a half. The VIX (the so-called “fear gage” based on the CBOE Volatility Index of Options on the S&P 500 Index) has recently been making record lows. Even the Treasury Market is still steady…the U.S. 10-Year Treasury Bond rate has closed within 5 basis points (5 tenths of 1 percent) of the 200 day moving average of 2.32 for 13 days in a row (a/o 10/13/17).

Unprecedented times seem to have been what the past two plus decades are all about. Add in a politically toxic background–yet an exuberant market. It’s at times like these, when we have stocks at a level near all-time highs, that you should be looking at your investments with a magnifying glass.

This run up has put many at ease, and not been an impetus to even pay much attention to investments for a while. But if you haven’t looked at your portfolio lately, the risks that have potentially accumulated need to be addressed.

The long-term capital market expectations are that the returns of the S&P 500 Index over the next decade or so may be somewhat lower than the historical averages. One of the reasons for this is the unprecedented (there’s that word again) borrowing by the Central Banks around the world since the Great Recession. In other words, we may have borrowed from the future for today’s gains.

Depending on your personal *risk budget, some may give consideration for further diversification in areas of the world that are developing and emerging to more fully diversify your portfolio. Of course, you must properly identify your *risk budget before making the decision as to where and how much to diversify.

In these times, unprecedented seems to be the norm. Consider the preparation prior to Y2K with adjustments, reviews and safeguards to computers. With such a run-up in the U.S. Stock Market, we think it’s time to view your money with the same type of critical eye toward your own personal goals, needs, risk tolerance, and time-horizon. If you aren’t sure what or how to do it, get a financial partner to assist. Consider a financial partner with the experience of the various market cycles and markets, certifications in financial planning, a fiduciary-client’s interest first, and one who talks about your goals and needs for your money as the mutual priority.

Important Note: The views expressed in this post are as of the date of the posting and are subject to change based on market and other conditions. This post contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Please note that nothing in this post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and should not be taken to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Lenity Financial, Inc. unless a client service agreement is in place.


*risk budget – a combination of one’s level of risk tolerance, time-horizon, needs and how hard or not hard one’s money needs to work to meet one’s goals – Lenity Financial, Inc.



Barron’s Magazine October 16, 2017

J.P. Morgan Asset Management -Guide to the Markets a/o September 30, 2017

Andrew Brenner – National Alliance Securities

Lenity Financial, Inc.

Financial Planning Association