It’s Time to Watch Your Investment Portfolio Carefully–Very Carefully

The news headlines are full of people discussing the recent market volatility.  Many commentators are offering their opinions of who’s to blame for the serious losses that we’ve seen over the course of the last few weeks.  The team at McCarthy Lebit is not in the business of offering opinions of what’s driving the market performance.  Instead, we are the business of determining what causes an investor’s loss: a bad broker, or a bad market.

The Rising Market Hides Problems

The stock market’s unprecedented rise over the course of the last decade caused virtually all portfolios to increase in value, without regard to those portfolios’ contents. Sure, not all portfolios did well, and many did not do as well as they would have had they been invested appropriately.  But, on the whole, most people saw their investments grow over the course of the last decade.  That sort of increase hides the fundamental portfolio problems that are revealed during market “corrections.”  The effects of over-concentration, unduly risky holdings, and problematic investment products tend to be revealed in falling markets, not rising ones.

The recent market volatility could, possibly, be the leading edge of the market downturn/correction that has been a long time coming. If the trend contributes, many investors will watch in horror as their life savings dwindle. What’s causing those drops in value?  It could be nothing more than the market itself. Even a well-constructed portfolio is not totally immune to market forces.  But the portfolio’s decline could also be the product of over-concentration in asset categories or particular securities. Or it could be the product of particular investment products that work to the brokerage firm’s advantage, not the investor’s.  Or the losses could be attributed to frantic trading as a broker struggles to make up for the account losses.

What’s Causing Your Losses?

Investors will invariably call their brokers with the key question: “Why am I losing money?”  And, if history is a guide, good and bad brokers alike will respond “It’s just the market. Stay the course.  Let’s just ride this out.”  While it’s entirely possible that advice is sound, it’s also possible a bad broker is stalling and hoping the market will turn around and bail him out of the jam he created by constructing a poor portfolio.  The smart investor, who thought to ask the question in the first place, would be well served to gain a second opinion. Another set of eyes may be able to determine whether there was wrongdoing or not.

We won’t go into all of the details here, but investors should know that losses that could have been avoided had the broker made suitable recommendations for them can be recoverable.  The team at McCarthy Lebit has been helping investors recover their losses, nonstop, since 1999 or so.

Determining whether the broker or firm is likely at fault is not easy.  We review every case carefully before we agree to accept it, and offer our initial review at no charge for our time spent.  Regardless of whether we take the case or not, you won’t pay for our time incurred for the initial review.

You have every reason to be concerned about the losses you see in your account.  If you didn’t think this sort of thing could happen, if your portfolio isn’t performing as you thought it would, or if your losses seem to be unusually large, please contact us.  We’re happy to take a bit of time to talk it through with you, review your documents if necessary, and let you know whether we think there’s something we can do to help.