Risk Management Archives - Cadence Wealth Management

Mar 15

The Monkey, the Volcano, and the Dangers of Rationalizing Risk

By Steve DeBoth Blog

Half way up the slope of a volcano lived a monkey. Like his fellow monkeys, he spent the majority of his days picking and eating fruit off the trees growing on the side of the volcano. Unbeknownst to his friends, however, he dreamed of one day opening his own banana pie stand where he could spend his old age providing delight to others, just making and serving pie, passing the time in enjoyable conversation. And picking lice, of course. He dreamed this every day as he foraged, and it made him happy. But he knew he would only get there…

Aug 11

Change Happens

By Cadence WM Blog

Change is a funny thing. It’s one of the only constants in life; something we can depend on. Whether we’re talking about the four seasons, aging, health, or quality of life, we can depend on change to shuffle things up on us before we have a chance to get too comfortable. The optimist would say “discomfort and stress lead to growth”, while the cynic might prefer to resist change or deny that it lies ahead. As humans, most of us are the latter. Recency bias has us believing the present can continue on at least until tomorrow, and when taken…

Mar 11

Ask Cadence: Are you optimistic for 2021?

By Cadence WM Blog

Yes. 2021 has the potential to be a very interesting year for a host of reasons. First, the risks and uncertainties: Covid-19 – We just don’t know how quickly the majority of people will get vaccinated and subsequently get back to a more normal existence. In addition, there are unknowns in terms of new variants and the effect they will have on the number of infections and severity of illness. Most are assuming that some semblance of normalcy will return for the second part of this year, but we just don’t know how the course of events will play out…

Aug 21

Retirement Uncertainties: Why Financial Planning is Necessary > Issue 6 > The Investment Elephant in the Retirement Room

By Cadence WM Blog

You may have to account for at least one, but probably more of the preceding issues before and during your own retirement. However, the biggest threat that we can think of is also the one that gets almost no attention in the “biggest threats facing retirees” research we conducted, and it illustrates the need for people to work with a professional more than any of the items mentioned in the preceding paragraphs. With the U.S. stock market currently enjoying its longest and largest bull market in history, the potential for large investment losses is very high. The last two major…

Aug 07

U.S. Stocks – How Risky is This Party?

By Cadence WM Blog

The month of July has seen the broad U.S. stock indexes such as the S&P 500, Dow Jones Industrial Average, and Nasdaq achieve new highs – which of course is a good thing for those with meaningful exposure to them. On the surface it appears that the party is still in full swing. We don’t have to go back very far however for a reminder of how quickly things can go bad and how uncomfortable it can be when losses start to pile up quickly. The fourth quarter of last year saw stocks sink almost 20% while May of this…

Apr 22

Either You Believe in Magic or You Believe in Math

By Cadence WM Blog

What we have been experiencing in financial markets the last few years has been truly mind-boggling. We would venture to say that nobody could have come even remotely close to forecasting the combination of events that have played out since the global financial crisis in 2008. Above average U.S. stock market growth with below average economic growth? No way. Foreign stocks being worth less ten years later? Not likely. More than $10 trillion in sovereign (governmental) bonds yielding less than 0%? To be clear, this means you pay the government to lend them money. That would be ludicrous. It will…

Apr 10

There Will Be A Downside To This Investment Cycle

By Cadence WM Blog

Since the US stock market bottomed after the Financial Crisis in March of 2009, large cap US stocks have returned around 15% per year. The vast majority of other investment categories have not enjoyed nearly the returns of the US stock market, however as that is the investing area that receives the most media attention, its behavior over the past ten years has shaped a lot of our expectations for what will happen going forward. Our brains have a tendency to assume the conditions to which we have grown accustomed will keep going, a tendency which has been labeled “recency…

Feb 19

The Monkey and the Volcano: A Cadence Fable Revisited

By Cadence WM Blog

While we don’t know whether or not the rumblings heard during the 4th quarter of 2018 were just more noise or the precursor of a much larger pyroclastic flow, we thought it may be a good time to revisit the Cadence Fable: The Monkey and the Volcano, originally published in August of 2017… Halfway up the slope of a volcano lived a monkey. Like his fellow monkeys, he spent the majority of his days picking and eating fruit off the trees growing on the side of the volcano. Unbeknownst to his friends, however, he dreamed of one day opening his…

Feb 11

What to Think of Interest Rates and Bonds – Revisited

By Cadence WM Blog

We wanted to revisit a blog post from exactly one year ago today that touched on why a rapid rise in interest rates matters for stocks. At the time – Feb 9, 2018 – interest rates had risen over 100% from their lows in 2016. Our point was that when interest rates, one of the key lubricants particularly in a highly indebted economy rise, it presents a strong headwind to continued growth and could serve to catalyze the changing of the business cycle. This dynamic could be even more pronounced in an environment where financial markets are extremely overvalued which…

Dec 10

Ask Cadence: How does today’s geopolitical environment influence markets?

By Cadence WM Blog

There’s no question that geopolitical headlines can affect markets on any given day. An escalation of tariff disputes with China, a change in tone coming from the European Central Bank (ECB), tension with our allies in the Middle East – all of these things have the potential to move markets. What’s incredibly difficult to ascertain however, is in what direction. A funny thing happens in markets sometimes – news that should be bad for markets can have the opposite effect. In a world of central bank intervention where interests are strongly aligned with higher asset prices, sometimes bad news can…

Risk Management

The Monkey, the Volcano, and the Dangers of Rationalizing Risk

Change Happens

Ask Cadence: Are you optimistic for 2021?

Retirement Uncertainties: Why Financial Planning is Necessary > Issue 6 > The Investment Elephant in the Retirement Room

U.S. Stocks – How Risky is This Party?

Either You Believe in Magic or You Believe in Math

There Will Be A Downside To This Investment Cycle

The Monkey and the Volcano: A Cadence Fable Revisited

What to Think of Interest Rates and Bonds – Revisited

Ask Cadence: How does today’s geopolitical environment influence markets?

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