Later this afternoon (Wednesday, 10/4) at around 1:20 pm (CDT) your cell phone will likely receive an emergency test alert.
In August, the Federal Emergency Management Agency (FEMA) announced that it will be conducting a nationwide test of the Emergency Alert System (EAS) and Wireless Emergency Alerts (WEA) today.
If you are within range of a cell phone tower, you should receive the following message this afternoon: “THIS IS A TEST of the National Wireless Emergency Alert System. No action is needed.”
This thoughtful and inspiring message got me thinking about how we could serve our clients better.
Maybe IAG should create its own emergency messaging system with a fancy acronym for our clients to clearly communicate what actions they should take during financial market emergencies. We could call them the Markets Are Moving Around alerts — or MAMA for short.
As I envision it, IAG’s MAMA alerts would arrive on our client’s cell phone every single day at the precise moment the financial markets open. These notifications would read something like, “THIS IS A TEST. The financial markets will fluctuate today, perhaps significantly based on short-term traders’ swings between fear or greed. No action is needed.”
During really volatile and pessimistic times, I can envision needing to send out MAMA alerts on an hourly basis to ensure our clients have a clear and concise inaction plan in place when emotions are running highest.
Clearly, my well-intentioned IAG MAMA system would grow into a huge annoyance for our clients. Most rational clients would likely block these alerts and report them as junk after a few irritating days.
Yet, the confident call to inaction during times of market-induced doubt can be the difference between staying on track for your personal goals or permanently damaging your financial future.
The great news is that – based on how we create and monitor our clients’ portfolios – the chances of an actual financial market emergency that impacts our clients’ long-term financial plan is remote.
Using our Portfolio SegmentationTM process, we design our clients’ portfolios so their required cash flow can confidently withstand three years (about 750 trading days) of “emergency” downside market volatility. Usually, this is plenty of time for traders to regain their composure.
We only commit our clients’ money to owning companies’ stock if they do not plan to need those funds for over 8 years (2,000 trading days). Owning a well-diversified portfolio of stocks is usually profitable over long periods of time, but comes with short-term bouts of downside volatility that must be met with stoic confidence in the long-term future.
Today’s FEMA test requires no action on your part. When you see alerts on “financial news” channels, read panicked social media posts, or even open your statements to find your account value has temporarily declined, remember THIS IS A TEST. No action is needed.
Quote of the week: Jason Zweig: “The lesson is clear. Don’t just do something, stand there. . . . Someone who can’t hold on to stocks for more than a few months at a time is doomed to end up not as a victor but as a victim.”
