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A Behavioral Approach to Investing

Using Scientifically Engineered Models

Stay Calm

Here's a short video message to our clients and advisors about the market sell-off.

Key points in the video:

  • Stay Calm – Our brains don’t like uncertainty, which causes us to over-react.
  • Real Issue is nobody knows what this will do to the economy and earnings ---What price should we pay for stocks? This scare can have real consequences and the Fed cutting rates will not help.
  • Having a plan is key. If you don’t have one, go to SEMWealth.com and click on the Risk Questionnaire button at the top. Even if you do have one, a check-up is always helpful.
  • Models are doing what they are supposed to –
    • Dynamic Models use the economy and have been bearish since late 2018 – this may ultimately help turn growth rate around more quickly AFTER the shock to the economy is over, which would mean buying riskier assets at discounted prices.
    • Tactical Models – very quickly moved to the sidelines. There is real risk of defaults in high yield and even investment grade bonds if this continues – this creates tremendous opportunities for our models once the dust settles.
    • AmeriGuard and Cornerstone Models – designed for the long-term buckets – they stand ready to reduce allocations if necessary. Already were only Large Cap stocks, which are holding up better than small cap and international.
  • You still have a chance to make adjustments – markets have given back 4th quarter 2019 gains, but are also back to where they were at in October 2018. If you’ve been uncomfortable with your exposure, now is the time to act. SEMWealth.com – take the Risk Questionnaire and use the Secure Upload link to send us a copy of your statement
  • Bottoms are a process not an event -- don't be fooled by all the moves up and down.

If you'd like to read more about our outlook and what is happening, check out these articles:

Bottoms are a Process: A look at what a solid market bottom would look like, which includes some wild swings. Also provides some key levels that may be a cause for concern.

You Need the Right Tools: A deep dive into the Fed's emergency interest rate cut, why it may have done more long-term damage, and bigger picture concerns which the Covid-19 virus may bring to the surface. Includes links to past articles highlighting the problems.

A Little Perspective Helps: A look at how the market determines "fair value" and a simple illustration to explain why stocks can move so far so fast.

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New Kent, VA
Jeff joined SEM in October 1998. Outside of SEM, Jeff is part of the worship team at LifePointe Community Church where he plays the keyboard and bass guitar. He also leads a small group Bible study.