Safe

April 22, 2020 - Published by IAG Wealth Partners

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It turns out that making our contagious world safer by shutting down people’s lives is much easier than making it “more dangerous” again.

As I observe people’s varying viewpoints on the appropriate level of risk to take, I can’t help but surmise what their investment portfolio must look like.

Supersafers would likely prefer that Safer at Home restrictions be upgraded to Safest at Home. They were the first to adopt facemasks and self-isolate.

They see microbial dangers lurking on every surface and in every personal interaction. They take every precaution and are offended by those who do not.

I must extrapolate that Supersafers’ investment portfolios are likely comprised of certificates of deposit or other conservative assets. They feel confident knowing their account value likely won’t go backwards, but also must be committed to saving more for the future as their return on investment is very low. They have assumed inflation risk in lieu of investment risk, but they may not be aware of that.

Safers understand that life comes with risks and avoiding all of them is impractical. No progress has ever been made without some level of risk. They adopt precautions if they make logical sense to them, but may also ignore some precautions if they believe that the inconvenience is greater than the underlying risk. I believe that Safers are currently the vast majority of our population.

I envision that Safers’ investment portfolios are a balance of conservative and more risky assets. They would prefer to spend a little more and save a little less for the future, relying on potential higher returns to make up the difference. Understandably, they do not like it when their riskier assets rapidly decline in value, but appreciate that they have conservative investments to rely on in times like this.

Unsafers are the most cavalier of the bunch. These bold risk-takers take minimal precautions, citing minimal mortality statistics to justify their approach. Nothing irritates them more than restrictions on their personal liberties.

I assume Unsafers’ investment portfolios are quite risky with little to no downside protection. Since historical statistics indicate the stock market goes up over time, they likely just shrug off the short-term volatility that comes with this level of risk.

Our political leaders are now in the unenviable position of satisfying a majority of the Supersafers, Safers, and Unsafers while maintaining sufficient medical resources for the infected.

People are also beginning to understand that one person’s safety precautions put another person’s livelihood at risk. Finding the balance between risks most people will accept will be the key to beginning the transition back to “normal.”

 

 

Quote of the week: Morgan Housel: “Every past market crash looks like an opportunity, but every future market crash looks like a risk.”


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Past performance is no guarantee of future performance. In fact, the opposite can be true. The information contained in this report does not purport to be a complete description of the securities, markets, or development referred to in this material. Investing involves risk including loss of principal.

Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

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