You may ask yourself when the market swings whether your investment losses are temporary, permanent, due to the market swings or due to something else. When the market is good, a rising tide lifts all boats, as they say, but when the market is down, the truth may be revealed.
Whether you are a conservative, moderate or speculative investor, when the wind has been removed from the sails, you really see what your investments are made of, if anything.
If you are a conservative investor, your investments should not generally ride with market swings. The beauty of being conservative is wide diversification in fixed income and a bit of equities.
If you are a moderate investor, likewise, you may be impacted more than a conservative investor, but you should not ride in lock-step with the market.
If you are a speculative investor, you have the potential for wild swings in your portfolio that may or may not be in step with the market.
But whichever type of investor you are, be on the lookout for stocks, bonds, mutual funds, REITs, private placements, notes and other investments that dive with (or more than) the market and never recover.
In market turmoil, you may find out that certain things your investment advisor told you about an investment are not true. You may have recourse against the advisor and brokerage firm for that lapse. You might also simply understand for the first time that your advisor put you in unsuitable investments, i.e., investments that were too risky for your tolerance for losses.
You also may recall that Bernie Madoff’s collapse happened after the market crashed and he could no longer find new investors to continue his fraud. Ponzi schemes are often revealed in times when access to new money is closed off to the bad actors like Bernie Madoff.
At Malecki Law, we evaluate your potential investment case at no charge. We will give you an honest opinion as whether we believe you have a chance of recovering some or all of what you lost, if not more.