Broker Check

Meritage Periodical - February 2022

Advisor Perspective

Prompting critical thinking and conversations around issues in our industry. Not intended as personal financial advice.

What should or shouldn’t I do in reaction to a declining stock market?

We thought it would be good timing to share a few best practices from our experience…

Do: Prepare in advance. We should all have investment portfolios that provide us with the confidence that we can endure periods of volatility and uncertainty. Being truly well-diversified means having a portfolio that is prepared for a variety of scenarios and not overly subject to any one risk factor.

Don’t: Make emotional changes to your strategy. Periods of market decline tend to be awful times to make changes to asset allocation, as these reactionary decisions are driven by our short-term emotional selves rather than our long-term logical selves.

Do: Buy more if you are a buyer. If you were planning to add money to the market, now is the time. Fear and declining prices are the definition of a buyer’s market. We all say we want to buy low, but few people do because buying low always means buying at a time when most other people are fearful and want to sell.

Don’t: Try to protect yourself. It’s normal human behavior to look for guarantees in times of uncertainty. However, that is pretty much the worst time to purchase a guarantee. A good example would be buying flood insurance for a home on the ocean when you know a tsunami is coming. The insurance company knows the same things you do, and they will reflect that in their cost.

Do: Look at your returns. It’s always healthy to confirm that your portfolio is behaving the way you would expect, given your asset mix. More importantly, it shifts your focus to your own portfolio performance, not the market in general or the most negative news headline you might read. We recommend looking at percentages, not dollars.

Don’t: Count the dollars you’ve lost. Whenever we count the dollars we’ve “lost,” we’re taking a measurement against the highest point we ever achieved. This process tends to ignore all the capital appreciation from prior years that we should still be celebrating. If you can’t resist the urge to count, figure out how much money you’ve made over the last five or ten years, not lost in the recent weeks or months.

Do: Call your investment advisor. If the market environment is causing you stress, this is the first person you should call. We are here to give you an honest assessment of how your portfolio is doing, and how well it is positioned to handle what’s on the horizon.

Don’t: Watch too much TV. The modern world has multiple TV channels dedicated exclusively to financial news. That is a lot of time for news anchors to fill! The natural outcome is lots of data and analysis that is not actionable. Worse, the shows are paid for by advertising, which targets your current emotional state and tries to sell you a “silver bullet”. Bottom line, watching the financial news of the day can really distract you from sound, long-term investment fundamentals.

Timely Topics

Updates and reminders that may impact your personal financial planning

Planning to make an IRA or Roth IRA contribution for 2021? Now is the time!

The contribution deadline for 2021 is April 18, 2022. April is quickly approaching, so we recommend contacting Colette as soon as possible to coordinate your 2021 contribution.

Colette, our Director of Investment Operations, can be reached at:
860.266.1574 or


Never Has the IRS Ever . . .

When it comes to tax scams, one of the most important things to know is how the IRS does (and doesn’t) contact taxpayers. Here are some things the IRS just won’t do:

  • Demand that you pay taxes without the opportunity to question or appeal the amount it says you owe.
  • Call to demand you make an immediate payment using a specific method (e.g., prepaid debit card, gift card, or wire transfer).
  • Threaten to bring in local police, immigration officers, or other law enforcement to arrest you for not paying (treats are a common tactic used by scammers).

So, if you get a call or email that sounds like any of the above, it’s likely a scam. For steps to take if you suspect fraudulent tax activity, visit the IRS’s Report Phishing and Online Scams page.

Do I need estate planning?

The answer: basic estate planning is for everyone. What if you were in an accident or became ill and needed someone to make financial and/or medical decisions for you? Is the person who would be assigned that duty the person you would want making those decisions? Basic estate planning is important for those types of scenarios, not just for the worst case. We can assist in coordinating efforts with your attorney and tax advisor to help you create or update your estate plan to suit your needs.
  • Common Basic Estate Planning Documents Include:
  • Wills are the core document of your estate plans, thereby helping to spell out decisions about how you want your resources distributed after death.
  • Durable Powers of Attorney allow you to choose the person you believe to be most capable of making financial decisions on your behalf should you be unable to do so yourself.
  • Healthcare Proxies name a person of your choosing to make important healthcare decisions on your behalf should you become incapacitated and unable to do so yourself.
  • Living Wills provide your family and designated healthcare proxy/attorney-in-fact with clear guidance as to the level of care you wish to receive should you be unable to do so yourself.

Personal preferences and/or scenarios may warrant the need for additional advanced estate planning.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

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