Consilience Productions
Essays

Out of Chaos Rises Opportunity

by Catherine Valega
  --   Certified Financial Planner and Chartered Alternative Investment Analyst with Green Bridge Wealth Management.

October 9, 2008
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Recent events in the markets have caused many, many, people to worry, stress, and even panic. The future market dynamics are still unclear, which adds to the confusion. During the last tumultuous week, I attended a 'Naz' conference in New Hampshire. The Nazrudin Project is an influential think-tank of national financial advisors exploring issues of spirituality and human interactions with money.

While we were all unclear about the near-term direction of the markets, we were all very clear about the necessity to continue supporting our main goal - helping clients integrate their personal beliefs and lifestyles with their financial decisions, and help our clients plan for and achieve their goals.

We also felt strongly about the fact that 'out of chaos, rises opportunity.' We need to get back to basics, and focus more energy on what is really important in our lives. In fact, we even engaged in several powerful exercises aimed at grounding each of us personally in order to allow us to better help our clients. In one of the exercises, we each answered personally, "What is good in your life right now?" As you can imagine, most of the answers focused on family, relationships, and health. In fact, my own answer was, "My children are healthy and happy."

Still reflecting on the grounding exercises, I felt a need to share some guiding principles that we can all benefit from in times of stress and beyond:

· STAY CALM - markets don't deliver returns in a straight line. To capture the long-term historical averages, investors should be in the market for the long term.

· STAY IN - while difficult for some, successful investing precludes the ability to endure market corrections. Historically, markets have rallied 12 - 18 months before the end of a recession. If you've gotten out of the markets, you may miss the ensuing rally.

· STAY THE COURSE -- During the past 10 years (12/31/97 - 12/31/07) the S&P 500 Index realized a cumulative return of 77%. However, to have benefited from such performance, an investor would have had to stay the course through periods of significant volatility. An investor who missed just 10 days of the best-performing days in the past decade would have lost out on more than three-quarters of the gains. Source: Standard and Poor's and Lord Abbett.

· REVIEW YOUR RISK TOLERANCE - if you cannot sleep at night as your accounts decline, be sure to speak to your financial advisor about reviewing your risk tolerance profile, and discuss your personal situation.

· PAY YOURSELF FIRST- in retirement savings, and other vehicles once those tax-deferred accounts have been maxed out.

· DO NOT SPEND MORE THAN YOU EARN - the next time you're contemplating a purchase/vacation/etc. that would have to go onto credit, SLEEP ON IT! Ideally, by the next day, you will have talked yourself out of that purchase.

· REDUCE YOUR DEBT - pay down those credit card balances. Debt equals stress, so reduce both of them!

· GET/STAY HEALTHY!! - if you're not in shape, make it a priority to get in shape. If you are, continue to make that an important daily activity. Start a walking group, or join a gym. Exercise is less painful and more fun when you're not alone. I run very early every morning with my girlfriend. I consider it my personal 'playdate' and exercise rolled into one.

· SIMPLIFY! - reduce activities, both yours and your kids. Just spend time together. Have a picnic, or go on a walk. Kids need fresh air, and time with parents, above all, NOT the stress of being run from one activity to another.

· FOCUS ON WHAT IS GOOD IN YOUR LIFE - your kids, your spouse, your health, are just a few examples.

· GOOD DAY/BAD DAY/WHAT DID YOU DO NICE TODAY?/WHAT ARE YOU THANKFUL FOR? - We have a nightly routine to go around the dinner table as each person answers these 4 questions. Not only is it always a conversation starter, it gets us all to focus on what really matters.

In conclusion, while current market and economic events can be unsettling, we should all be seeing the opportunity this creates. It is an opportunity to get back to basics, and focus on living within our means, and gaining strength from what we find really, truly important in our lives.

I welcome continued dialogue regarding recent events, or any other financial concerns. Please feel free to contact me at 617-407-3566.

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Catherine Valega, Certified Financial Planner and Chartered Alternative Investment Analyst with Green Bridge Wealth Management, focuses on financial life advising. She strives to integrate every client's unique lifestyle and goals with their financial planning decisions.

Securities and Advisory services offered through LPL Financial, Member FINRA/SIPC.

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