Econ Wealth Management
Chief Investment Strategist, Managing Partner
As the Chief Investment Strategist, Steve uses his years of experience as a Chartered Market Technician (CMT) and over 20 years in the financial industry to lead the firm’s research using a top-down/ bottom-up approach to determine the Macro, Asset, and Portfolio Strategy (M.A.P.S) for the asset management team. This approach is instrumental in helping the Wealth Planning team manage financial plans through active portfolio management.
As the lead manager for Tactical Portfolio Strategies, he uses technical analysis to analyze current holdings and find opportunities in equities to use in the firm’s tactical programs. This analysis also directs the tactical overlay holdings inside the Strategic and Pilot Portfolio Series programs. He focuses efforts on determining stocks with an appropriate risk to reward ratio that qualify as swing or position trades for the various portfolios. He provides chart analysis and technical studies in support of all purchase and sell decisions.
As head of the Asset Management team, Steve is an integral part of the firm’s asset management communication to clients and the firm’s Wealth Planning team. He also oversees all the firm’s programs. As Managing Principal, he oversees all the firm’s departments and operations.
Math, Economics, Computer Science, Shippensburg University
Assets Under Management:
First, you are on the right track to be concerned in this current market environment. You may hear many calling this a 'buying opportunity' for the long term but the more important question is how does it impact you and your situation? If you are losing sleep and turning on the news to see what is going on regularly, then you are right in considering cash as an option. However, the downside would be that your cash holding won't provide you the opportunity to earn a return to provide for the income need you described. All normal suggestions apply here: Diversy, have a cash runway to last 12+ months, hold some equity. You will hear that often enough. The one different thought is to segment out your entire amount into different categories that will allow you to relieve your worry and stress. How much available money should you have to help you sleep at night? How long with that last for you? What amount can you expose to the risk of a volatile market and not think about it so you can attempt to earn at least the income amount you need? My belief is you can use cash as a tool over the next 12 months - especially over the summer to come. An article I produced about this topic on investopedia may help understand what could be best in your scenario. ("Holding Cash Instead of Chasing Investment Returns" - https://www.investopedia.com/advisor-network/articles/avoid-hazards-chasing-returns-holding-cash/). Stay diligent!
Having classes in Economics and Finance will provide you knowledge and a starting point for a career in the financial industry. You may want to give consideration to having either of those as a Minor in order to devote time to Mathematics. The ability to use numbers efficiently will help you as you consider either a position working with individuals or small business owners (and work towards a CFP or some similar designation) or as an analyst (often workings towards becoming a CFA). The efficient use of computers (and possibly a basic programming course) would help as well. I've spent 20 years in the industry working as a CFP and CMT and the classes I took in Economics, Computer Science, and Mathematics have added more value to my impact on helping clients over any other areas. Another suggestion is to read as many personal finance books as you can while understanding how the courses you take in school will apply to real world situations. There is no subsitute for real world experience. But getting this background should prepare you well for a career on Wall Street.
Great question! Many factors would be important before making this decision. You age, total value and tax bracket are of utmost important. Speak with your tax advisor for the information that will pertain to your situation. In general, a younger person would be wise to consider converting a Traditional IRA (regular as you stated it) funds into a Roth IRA. With a longer time frame and potentially lower tax bracket (assuming you can afford to pay the tax due on the conversion from funds outside of the accounts), you may benefit from a good investment portfolio within the Roth IRA and a larger dollar figure that could be invested to align with your goals and time frame. Someone closer to retirement age might need to consider this decision in further detail (again, based on dollar amounts, potential tax due, and long term benefit based on estate planning goals).
From an investment perspective, it’s often best to have larger dollar figures to invest and help truly diviersify holdings. Whether you are a buy and hold investor at a younger age or an active trader that is looking to avoid a bear market, it’s wise to keep a close eye on your portfolio and having it in one account can often help lead to better results in the long run.
Congratulations to you and I commend you for taking on this goal and your age. You have the right mindset to set yourself apart as you increase your income potential and build your nest egg. With your description of goals, you seem to have set up a structure that may be suitable. It sounds as if you have only questioned it based on your recent investing experience. If you continue the course with the plan you have set and are able to save the necessary amount of funds to meet your down payment, it may be wise to keep going with the Roth and work to adjust your investment strategy.
Using a Roth is what I consider a gift that the law has given the investor. This gift is lost each year if you don’t use it. Thus, maximizing what you save in your Roth could not only be beneficial in the long term, but provides a benefit that most may not realize per the tax code. Contributions can be withdrawn at any time. In your case, this means in the event you need more for the down payment, you can look towards that Roth. Be careful – you want to make sure you don’t exceed that amount or withdraw any gains you may have since it was invested.
It sounds that your time would be best spent finding the right plan for the funds in the Roth. Depending on your risk tolerance, you can (either with your own due diligence or finding the right Advisor) develop a better method to find investments with the potential to grow based on current market conditions. Gains take time. And with good choices, even those that have declined might be worth adding to within the Roth as you continue to add to it. My suggestion would be to speak with someone your trust and get your Roth on the right track. Or consider may “robo” options currently out there so you can find a lower cost option that may meet your needs.
You seem to have started a good plan that could really help you over the next few years. Starting at your age can lead to better rewards later! Keep up the great start.
A bear market is an inevitable part of being a long term investor. But investing for the “long term” should not have to mean sitting through what could be a dramatic decline in the value of your portfolio. Most respond to the idea that you “can’t time the market” and that you should hold through while others sell. There is also the idea that most money managers do not beat the index anyway so they can’t help either. In my opinion, these are simply excuses for not keeping a close eye on your hard earned money.
Of utmost importance before you adjust your holdings is to watch for key signs that a bear may be sniffing around. It’s never good to be the last one to leave the party. Leaving early is never easy, but it’s often best. By working with an advisor that uses technical analysis, you may have some insight into a few indicators that can help prepare what may be around the corner.
They key to where to put your money during difficult times would lie within where money is flowing at that time and what is least correlated with the assets that are losing value. Often, metals or bonds have shown to hold value better during bad times – but that is not always the case. Cash or inverse ETF’s may be your best option and sitting out with a large majority of your portfolio may be necessary. Holding portfolio protection in the form of options may help. A loss of half your value means you have to then double it to get back to even. It is best to avoid that situation.
The bottom line will be that if money is flowing out of stocks, just like water, it is flowing somewhere. This is not timing as much as adjusting what you own according to the then current economic conditions. Many indicators can help determine this and provide a clue as to what may be a good place to invest when it appears the “sky is falling”.