The Seven Year Itch: Financial Cycles & You


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When you’re in it you can’t always see the forest for the trees. When you step back you can see the pattern. When you understand the pattern you can see opportunities. Cycles are good.

Our approach at shepard FINANCIAL is to seek ways to minimize short-term fluctuations, focus on long-term growth, and leverage information found within the bigger picture.  It’s all cycles! (If you haven’t read the newsletter this month, check it out for more about this incredibly pervasive 7 year cycle phenomenon.) We’re active managers, so we aren’t letting your portfolios cruise; we’re looking for the opportunities that can potentially arise at different times in the apparent phases of the 7 year economic cycle.

When you look at the S&P 500 chart above you may note that if we extrapolate the data it seems we’re due for another market correction soon. This may be, but it is nothing to fear, in fact it’s better to think of a market correction as a time of great opportunity. It’s like knowing there will be great deals on Black Friday because you may be able to buy things that will become very valuable later in the 7 year cycle. This is how you can create long-term value: positioning yourself to withstand short-term “crisis,” (so called largely by the media), in an effort for you to experience long-term value.

A balanced financial strategy is what we suggest. Not all markets behave the same way at the same time. Emerging Markets, Commodities, Gold and other markets may not share the same timing as the S&P 500, and by diversifying your portfolio you may be able to minimize the impact of market corrections. It’s also important to understand that your financial strategy goes beyond your portfolio. For example, the lowering of oil prices may seem negative when you’ve invested in oil, but you benefit as a consumer paying lower prices for fuel, a personal win.

Sometimes what causes a market correction is not anything that happens on Wall Street. The correction in 2008 was due to mortgages & real estate which boiled down to a banking issue, not a Wall Street issue, but the impact was felt throughout the economy. Some people predict that the next correction may come from the social lending/social investing world, KickStarter and GoFundMe for example. Social investing isn’t done on Wall Street, but an upset in that world could cause a broader ripple effect. In fact, we in the financial industry are not permitted to engage in social lending/investing, perhaps for this reason. When the impetus for a correction is somewhere other than Wall Street it’s difficult to know its origin in advance making a diverse portfolio and a big-picture financial perspective that much more important.

To experience financial confidence you don’t have to get trained on economic patterns, nor do you have to watch the economy like a hawk. You really don’t have to listen to sensationalism surrounding the economy. Understanding that the economy, like nature and you yourself, moves through phases & cycles will give you more confidence and more of an ability to relax than many other people. Having a financial professional who understands how to identify patterns and attempt to optimize opportunities is critical in your journey to greater health and wealth.

Everything evolves.

Know yourself. Know what you want. Find the right coach. Evolve with your money.


Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. They do not necessarily reflect the views of LPL Financial.

No strategy or process assures success or guarantees against losses.

Investing involves risks including possible loss of principal.

All performance referenced is historical and is no guarantee of future results. Statements of forecast are for informational purposes and are not guaranteed to occur. Trends discussed are not guaranteed to continue in the future.

All indices are unmanaged and may not be invested into directly. The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in there industries and widely held by individuals and institutional investors.

Securities mentioned may not be suitable for all investors.

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