CEO Report: Fourth Quarter
February 15th, 2017
By Jeff Petersen, CEO
As market volatility occurs, we may have to wait some time before we remain comfortably above this milestone. It does, however, shine a bright light on the important things, no matter how small, that are paramount to meeting client expectations and continuing to elevate our own expectations for delivering client services.
While much of the attention of wealth management services focuses on superior investments, results can implode without properly protecting investments that clients have worked hard to build. It is easy to look back over recent history to find at least 3 major market events that permanently caused portfolio declines for many investors without proper diversification, discipline, or appropriate investments.
October 19, 1987 is known as “Black Monday”. The Dow Jones Industrial Average (DJIA) dropped 508 points or 22.6% on that day. The prior two-week period had already declined 15%. Petersen Hastings encouraged clients during this period to stay the course, and allow investments to fully recover. The DJIA ended 1987 with a positive return, and clients that stayed the course fully recovered.
The “Dot-Com” bubble burst in March of 2000 that lasted until October 2002 saw the Standard and Poor’s 500 Index drop almost 50% with the impact on growth stocks (higher priced stocks based upon earnings) being even more drastic. I remember a physician walking into our office after “losing” over 80% of his account value. His previous advisor encouraged growth stocks, and these types of stocks were disproportionately impacted by the stock market decline. That is one of the reasons we favor “value stocks”, which are lower priced stocks based upon earnings.
I will never forget the stock market decline beginning in October of 2007 and lasting until early March 2009. During this period, most major stock markets lost over 50% of their values. Unlike the declines of 2000-2002, when small U.S. stocks provided a cushion with their positive returns during this period, the “Great Recession” was felt across all major stock markets. Clients were pushed to the edge of their risk tolerance, and fortunately, all but a few stayed the course and were rewarded for following our advice. All of our advisory team was emotionally invested in being there for our clients, and they did their best to shoulder as much of the market stress for clients as possible. There were significant casualties within our industry, many advisors left the profession and/or sold their businesses due to the extreme stress of the market recession. I could not have been more proud of our Team for the patience, care, and devotion to our clients during that challenging time.
Our primary role is to keep investments out of client portfolios that can possibly do harm, and we take that role very seriously. We are methodical in our due diligence process when evaluating possible enhancements to client portfolios, and we prioritize “do no harm” above possible return enhancement. In the spirit of the historically tough winter in the Tri-Cities, there are a lot of “investment pot holes” being marketed to investment professionals, and Petersen Hastings is serious about continuing to keep them out of our client portfolios.
On behalf of all of our Team at Petersen Hastings, thank you for your continued loyalty and trust. As always, we welcome your comments and feedback.
Petersen Hastings achieved a major milestone last week when we crossed over to $600 million in client assets under management. Achieving this milestone is an affirmation to the importance we place on client trust, and the continued vigilance required to attend to the ongoing and evolving needs of clients.