advice/perspective on jobs, work and management

My clients can’t stomach uncertainty

I’m a portfolio manager who specializes in investment strategies for retirement. For the most part, my clients are reasonable people, but whenever the stock market takes a dive (which seems to happen more and more frequently these days!), I end up spending hours on the phone trying to calm their rattled nerves. I remind them to take a long term view of their investments, and resist the urge to pay attention to the market’s daily ups and downs. That’s not just something I say, though. I genuinely believe that, over the long haul, stocks are one of the best places to put your $$$. Still, it’s stressful having to deal with freaked out investors all the time… – Name withheld       

Personally, ever since I read Michael Lewis’ Flash Boys (2015), I don’t know why anyone would put their hard earned money in the stock market.

Electronic front-running? “Dark pools”? Banks whose motivations are at odds with their “clients’”? No thank you. Unless you’re gaming the system yourself, it seems, you’re probably being taken advantage of.[1]

But that’s just me.[2]

It is true, however. Investing in the right stock at the right time can pay off over the long haul, as you say. I mean, how many times do I have to be reminded that if I’d invested $100 in Apple when the company first went public (or Microsoft, Amazon, Berkshire-Hathaway), I’d now be a multi-gajillionaire? If you are going to invest then, ignoring the everyday fluctuations in market would seem a prudent strategy to adopt.

In your case, however, I’m afraid I’m going to have to side with your clients.

As a professional investment advisor, one of the things you presumably offer those who pay for your services is some measure of market expertise. Which companies to invest in, and which to avoid – or when buy, and when to get out. Doubtless you’ve done your research, or possess a market savvy that is above and beyond that of the average layperson. This allows you to structure a portfolio which, ideally, will maximize return on investment.

But what your client’s may be wondering is: Why doesn’t this expertise include the ability to forecast broader market trends?

You see, another, even more fundamental market truism is to “buy low, sell high” – as I’m sure you are also well aware. So when the overall market takes a dip, doesn’t this also offer an opportunity from which to profit?

For instance, say you were to pull all of your client’s money out of the market at precisely the right moment – that is, just before it starts another slide? Then, after waiting for it to bottom out, you were to reinvest it? Wouldn’t that be another way to “beat the market,” so to speak, and put you ahead too?

Here, I’ve drawn you a picture to better illustrate what I mean:

No doubt that is much, much easier said than done (and anyone who has figured it out probably isn’t going to part with their secret). Nevertheless, it’s a fair question, right?

The bottom line though is that, on occasion, customers are going to complain. Whether you’re selling them on investments, or bagging their groceries, someone’s always going to think there’s a better way – and say as much. So, no – I don’t have any advice for you, other than to stick to your script, and be as patient with your investors as you can.

In fact, if I have any advice at all to offer, it’s for your anxious clients.

Another bit of tried-and-true market wisdom is perhaps even more relevant here – although it’s not something I hear as much in these days of 401Ks, IRAs, and mutual funds. (By the way, when did we decide it was good idea to put our retirement savings in stocks anyway? Oh yeah – it was right around the time companies started doing away with pensions.)


“Don’t invest more $$$ in the market than you can comfortably afford to lose.”



[1] Electronic front-running is a way to exploit a faster connection to the market in order to cheat investors. The way Lewis explains it, when you or your broker clicks the “buy” button on your/their computer, these “high frequency traders” race ahead, buy that stock out from under you, and then sell it to you at a slightly higher price (and immediately pocket the profits).

[2] Then again, maybe it’s not just me. According to Gallup, a little over half of all Americans (61%) have money invested in the stock market. The median investment, according to the PEW Research Center, is only $40,000. And as of 2019, it is just the wealthiest 10 percent of Americans who own most (89%) of all stocks. From: “What percentage of Americans own stocks?” by Jeffrey Jones,it%20has%20been%20since%202008) and “More than half of US households have some investment in the stock market” by Kim Parker and Richard Fry,for%20those%2055%20and%20older and “The wealthiest 10% of Americans own a record 89% of all US stocks” by Robert Frank All retrieved June 1, 2023.

[ 1 Comment ]

  1. Monsignor Patrick

    “Be patient” is excellent advice. For everyone. Some days it’s harder to put into practice, but it’s usually a decent game plan / perspective. Cuz no job comes without its “issues.” In fact, hardly anything comes without issues – even apples, if you’re a Type 2 diabetic.

    Going to head over to the “Is Greed Good?” link. Should be interesting…


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