“Black Swan” Investment Advice: Be Prepared

COVID-19 reminded us that life-changing “Black Swan” events don’t just happen once in a century. They are an ongoing reality.
In the last twenty years, we have lived through 9/11, the global financial crisis, and now a global pandemic with the unintended consequence of rolling economic lockdowns.
On an investment level, all of these events have delivered a sharp hit to financial markets from which they have recovered. Such is the resilience and strength of the U.S. capital markets and the underlying economy.
But on a personal finance level, the impact of these events can be much more damaging and long-lasting, particularly for individuals nearing retirement or in it, which is why we asked this week’s guest to join us. Clients in those vulnerable years are his focus.
Our guest this week is Mark Cortazzo, a certified financial planner, Founder, and Senior Partner of MACRO Consulting Group an independent wealth management firm.
We asked Cortazzo to walk us through the conversations he has been having with clients about preparing for these “Black Swan” events.
WEALTHTRACK #1717 broadcast on October 23, 2020
More info at: wealthtrack.com/financial-sur...

[@angelika1586]

Thank you Consuelo and guest, excellent information!

[@lanedeyoe714]

Brilliant guy. Mark r: eally lays it out for you. In retirement Rebalance. Be diversified. Dont take excessive chances. You dont have 30 years to make it back like when you were 30. I fear the low (no) interest rate environment will cause seniors to be way to risky.

[@ednan9]

Great guest! More like him please

[@frednesvet5046]

90% of financial advisors and mutual fund managers don't beat their benchmarks. Would you get in an airplane that has a 90% chance of crashing? Just buy an index fund and you'll do fine.

[@george6977]

Yes, a broad market low cost index funds or ETF.

[@cjdch6604]

Excellent advice

[@jackburton806]

As long as the Fed is keeping money free the majority of money being invested is going into stocks. Doing esoteric tricky gimmick investments usually ends in tears. About 30% of my portfolio is in cash and bonds and to be honest it is money I don't need for anything and it is what I consider my FU fund. The rest is in a variety of equity positions. Some of it is value and dividend some is growth and a good chunk in a vanilla total stock market index. When times are flush I skim off the top and put it in cash or bonds when people are jumping out of windows and there is blood in the streets I usually transfer some from cash into equities that have had a downturn. My wife retired at 56 and there is a high probability that I will be able to retire by 60.

[@KK-pm7ud]

I'm seeing a lot more comments today on Wealthtrack. From some of the comments it seems like novices have found the channel. This guy knows what he is talking about. He's well know and is a CFP.

[@redjetsen1002]

If the Treasury is supporting markets.... then if the market goes in a straight horizontal line... and fed cash is till going into the market. The sellers in the Market are getting a direct subsidy from the government?

[@jimo5758]

Interesting that he observes that it's impossible to predict whether growth or value will "outperform" the market (hence the conclusion that "winning the loser's game" would suggest buying and holding the TOTAL stock market - containing both growth and value in one investment) and then giving as his "One investment idea for the long run in a diversified investment" as a "Large Value" fund. Why not just keep it simple and invest for a lifetime in Vanguard's Total Stock Market Index fund (VTI or VTSAX)? Expense ratio of 0.03%.

[@frednesvet5046]

Because then the advisor doesn't make his exorbitant fees.

[@MrBigblue7]

Do a little research and you'll see why you are wrong.

[@libertysprings2244]

Low risk is a muni school bond in a growing area like Texas. Try austin community college bonds. Around 2% still.

[@george6977]

They are not backed by the Fed.

[@christopherdennis4280]

Would someone explain the difference between MGV and VTV?

[@KK-pm7ud]

VTV looks to have a higher allocation of Utilities and Real Estate. The top holdings for both seem very similar.

[@christopherdennis4280]

@@KK-pm7ud thanks. It trades at a much lower volume and has less assets so why mgv?

[@neverhit17]

I don’t know what they’re talking about but it makes alot of sense

[@toma768]

This person just gave you a complicated solution for a simple problem. He just wants you to pay a financial adviser. First research told you to do 4% withdraw rate to start with. He used 5% withdraw rate to scare you. My solution is just very simple - buy Wellington fund (2/3 equity & 1/3 fixed income) and withdraw 3.5% (wait until 3.5% is enough before you retire)

[@MrBigblue7]

I made the mistake of buying the underachieving Wellington fund. Luckily I realized it before it was too late.

[@douglasschorr443]

Strength of US stock markets and underlying economy? The productivity of Asia and determination of South American not to be pushed under is reality.

[@maryluthy1282]

What to do if there is a coup and the dollar collapses?

[@merchantsailor]

Harris had me at hello

[@dzki7831]

2019

[@toddthomsen6696]

5% of a 1 million investment is NOT $60,000 a year it would be $50,000 a year.

[@VV-lq4di]

May it is 60000 in Canadian dollars

[@michelesimko7541]

By now budgets are cut back to maybe buy a blouse or new towels. No entertainment budget, internet only entertainment. Just see electric,taxes raise. A nice meal twice a week with candles is a joy. Financial advisor is not an option

[@StephenDoty84]

Don Corleone would ask someone like this to be his consigliere.

[@audiophileman7047]

This guy doesn't rate it, because he doesn't believe in alternative investments beyond stocks and bonds and maybe some other things like annuities. If Don Vito were around, he'd own a ton of gold! 😁

[@christopherdennis4280]

LOVE this show. But what's with some of the 'knowing' smiles? It's as if they're getting snarky comments in their earpieces from the production crew.

[@TimZ007]

i wouldent put nothin in bonds. if they loose those rates they could loose half quick. thats your black swan.

[@Tonymanero1960]

A couple of shots of Southern Comfort,....a frosty Bud Lime,....recently retired at 60,.......and a nice fat stock portfolio,..AND a new WealthTrack with Mark Cortazzo,......time to kick back on a Friday night and soak up the investment advice.

[@JerJam]

​@@lindaesposito5230 hmmm? for example?

[@audiophileman7047]

@Marco Deo Not so puzzling, these guys make their living on telling you how to invest in complicated investments. Remember the complicated buffer investment he talked about and then said you need a professional to guide you through it? He was also reluctant to really mention any specific investment of any value.

[@audiophileman7047]

@Marco Deo No, I meant buffer investment, the one this guy mentioned where you have a cap on losses and a cap on gains. That's complete BS. If I had one of those I would have lost a ton of money on gains. I only get say 18% and they get the remaining 100% or more. Yeah, I've actually had investments triple in value and in some case quadruple. Buffet is really just good at employing the investment theory developed by economist and investor Benjamin Graham. The market also cooperated at the time Buffet was making his billions. We live in a much more dangerous market and the value plays are fewer. Buffet is even buying gold miners or at least one. So much for his past negative comments on gold.

[@audiophileman7047]

@Marco Deo Risk control is the biggest thing to consider right now. Remember this: it is easier to recover from lost gains than it is to recover from lost capital. I lean more toward hard assets right now. It has a lot to do with my overall financial picture and sources of income in the future. I'm lucky enough or I chose to work for an employer that offers a pension. The pension fund is invested about 60% in the stock market. If something bad happens in stocks and the fund is short on paying their obligations, I have other investments outside of stocks to come to the rescue until the fund recovers, if it recovers. I also plan to work part time when I retire or lower my expenses by maintaining my home and autos. I like to stay active and I can earn income to supplement my retirement while doing things I like to do. Asset allocation is the key to everything and the investment pyramid should be how it works. It's all about managing risk and building multiple sources of income and living debt free.

[@youmayberight2434]

Diversify.

[@tonyhewon199]

Full of nothing is nothing minipulation psychological bull

[@audiophileman7047]

This guy is an award winning financial planner? When he should use the term "asset allocation", he uses the term "diversification". Then he suggests that those people who invest in things other than standard investments are not doing the right thing. I agree about cryptocurrencies, but real estate and gold can be real winners as part of a well allocated portfolio. The real lesson here is that you cannot solely depend on stocks to carry you through retirement and you cannot depend on bank interest to carry you through retirement. Maybe you'll have to work longer and/or save more for retirement instead of wasting it on "the high life". Maybe you'll need to learn how to live more frugally and economically. Where's that video on how to eat out of garbage dumpsters? 😁

[@KK-pm7ud]

Hey. Which hedge fund do you work for?