The Legacy Perspective - April
by Steve Wachs, CFP®
I am writing this Perspective on a day in which the stock market is up dramatically, and oil prices are down as a two-week cease-fire with Iran has been announced. I’m putting on this timestamp as who knows what could happen in the next 24 hours. So far, 2026 has had the “Apocalypse Du Jour” with Greenland, Venezuela and then the Middle East conflict. Assuming the Middle East conflict is settled, I would like to think things will calm down, but I doubt that will be the case. What you need to know is that during these volatile times, I believe we do our best work. Our experience in helping clients through 9/11, the Global Financial Crisis of 2008-2009 and the Covid shutdown guides us on what to do and most importantly, what not to do, during times of uncertainty.
I enjoy watching political dramas (the fictional kind). Some of the most intense scenes take place in the “Situation Room.” Input is given by different people and then a decision is made on what action to take. Let me take you inside our “Situation Room” which happens to be our conversation room. Last week Matt and I got together after coming back from different investment conferences. We compared notes of what we heard from experts on the financial markets and then outlined three potential scenarios.
Scenario One
With the recent decline in US equities, we could use this opportunity to increase equity exposure. Many equities are trading at lower values than they were just 6 weeks and ago and this would be an opportunity to buy on “sale.”.
Scenario Two
Given the volatility and extreme uncertainty of future events, we could reduce the risk of the portfolio by selling down a portion of the equity allocation. If the Middle East conflict escalated, this would reduce further drawdown.
Scenario Three
Make no major portfolio allocation changes. Historically when geopolitical conflicts are resolved, the markets rebound quickly. Also, we have already captured gains throughout last year when the equity markets increased.
What scenario did we choose? Let me walk you through our thought process and provide our conclusion. Regarding scenario one, most client portfolios were down less than 3% before today’s rally. Yes, some equity positions have declined more, but not to the point that we see the “flashing buy” signal. Regarding the second scenario, the most difficult part isn’t selling equities, but it’s knowing the right time to buy back. The best investor in my lifetime is Warren Buffett, who said “Market timing is both impossible and stupid.” He believes, and so do we, that long-term investment success comes from time in the market rather than timing the market. We chose scenario three which is not to make any major changes now. With emotions running high, it can be tempting to “just do something,” but many times the best action during times like these is no major action.
That type of response will not get us on a financial news show as one of the “talking heads,” but portfolio management for long-term success is not about sound bites. It’s about using a disciplined, thoughtful process. Reach out to us if you want to discuss your specific situation.
Disclosures
Legacy Consulting Group is registered as an investment adviser with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed.
All investments and strategies have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark.