Does Your Portfolio Have To Crash With The Market? – Ep. 107

In my twenties I loved riding and racing bicycles! Most of my races were on a closed circuit that was less than a mile long. The race would go around the closed loop for anywhere from 45 minutes to an hour.

This kind of racing gets fast! My strategy was to stay in the front third of the group of racers and then in the last lap sprint to the finish. I’m pictured below in red.

During that hour leading up to the finish it’s a fight to survive and not crash. Every race was an adrenaline rush, but a few of them stand out as extra memorable. The races I won are enjoyable to reminisce about, but that’s only half of the picture. Unfortunately, the ones I crashed in tend to be stamped in my mind due to the physical pain they induced.

Many of these races were in downtown settings as they naturally had turns and were easy to create a circuit. My friend Phillip and I had driven to downtown Roanoke, Virginia, for a race one summer.

I was hanging in the top third of the racers. Everything seemed to be going my way until I made a turn to the right and my pedal scraped the ground. This sent me to the ground with a big thud. The picture below is from that race. Notice my leg with the black from the road contact.

Normally, if you can get to the wheel change area, you can get back in the race when something like this happens. Fortunately, I wasn’t injured and was able to get back in the race. I ended up placing eighth in the sprint finish.

Some people in the market have had it going their way until this year, but the market has made a turn. Some savers have been beaten up a little, but they may be okay if they have enough time to recover their losses. At this point they may feel like they can stay in it and live to see another day. But if they’re taking income off their positions they may be really hurting in this down market.

Later in the year Phillip and I traveled to downtown Salisbury, North Carolina, for a race. It was close to where I grew up so my parents came out to watch. They were standing just beyond the finish line. This race course was like a figure eight where on both ends of the course we navigated a small city block and then there was a wide-open stretch in between each square to race back and forth to. This allowed the race to generate a swift pace because it was essentially a sprint to each corner.

I had just upgraded to a more advanced level of competition and this race was fast! I found myself not meeting my goal of staying in the top third of the riders. A few laps into the race I was on the outside of the road to the right. We were turning left.

There were temporary metal barriers placed on the road that showed the course. I was a foot to eighteen inches off the barrier to my right when someone came up on my right side. The rider cut across my front wheel.

It was just past where my parents were standing, and my poor mom saw it all transpire. It must have been a horrific looking crash. Having children now, I can’t imagine what panic she felt.

Paramedics were over to me before I could even move. I hit the left side of my head and cracked my helmet and I had road rash down my right leg.

I mentioned to the paramedic that I could not turn my head because of the way I had pretzeled in the crash. I quickly figured out that was the wrong thing to say. I got strapped on a hard backboard and transported to an ambulance.

When I got on the ambulance the two paramedics hooked two IVs up to my arm in two veins and insisted on giving me morphine. I resisted at first. I don’t like taking medicine. They convinced me that it looked like my wrist was broken because of the massive swelling. They told me it was going to be painful to set if that was needed. I capitulated.

We made it to the ER and had x-rays, tests, and they cleaned the road rash. Fortunately, I did not break my wrist, my head was okay because I had a helmet. I had to have extensive chiropractic help to get the range of motion in my neck back, and the subsequent weeks of the road rash healing was painful.

I finally recovered and I tried to race a few more times. But I was timid because of the fresh road rash and sore neck. When I raced, I ended up just sitting in the back of the group of riders because I didn’t want to crash.

If the market continues its downward trajectory it may cause retirees to crash in a sense. The last thing you want in retirement is waiting on your money to make up its losses. The money you keep in retirement is more important than the money you make.

We may be able to lessen our potential for financial trauma because who wants to be in a position where we are picking up the pieces of our situation? A better approach is to create hedges so that you’re less impacted by major market sell offs.

Have you created productive hedges in your portfolios? The type that may earn a return in a down market or ones where you’re not going to lose? If you’d like to learn more about how we help our clients proactively plan for market downturns give us a call at 864.641.7955.

Until next week,

David C. Treece,

Financial Advisor

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