Tuesday, February 5, 2019

From the Desk of David Burks: "Be selective." ...Could there be less valuable investment advice?

David Burks
Author position
Sr. Vice President | Equity Income Analyst

From the Desk of David Burks

Hilliard Lyons Senior Vice President and Equity Income Analyst David Burks has been with the firm since 1983. He has been nationally recognized for his stock recommendations eleven times: seven times by Thomson Reuters and four times by The Wall Street Journal. David has appeared regularly on CNBC over the years.

“Be Selective.” ... Could There Be Less Valuable Investment Advice?

Few industries take themselves as seriously as the financial services industry. We believe understandably so, given the enormous importance of money to investors. Certainly at Hilliard Lyons we have always taken the responsibility of managing your assets very seriously and make every attempt to do so in as wise a manner as possible.

Having said that, we don’t believe our industry is above a little introspection or questioning. What we’re referring to are the countless times that people in the financial media encourage investors to “be selective.” Unfortunately, this “advice” is so obvious as to render it virtually meaningless. Moreover, this advice comes from well-seasoned experts who speak with great seriousness.

We think the advice “be selective” is an empty phrase that contributes little. When are we not selective, when it comes to investing or nearly anything else for that matter? Imagine going to a restaurant for a nice meal and looking over a menu of potential choices. When the person taking your order asks what you would like, how likely is it that you’re going to respond, “food?” Or imagine going to a car dealership and telling the salesperson that any car will do. The point is, we’re always selective.

In addition, we’re continually bemused by just how often we hear this advice given. We also hear it being recommended in varying market conditions. The market’s gone up a lot? Well, then, now is the time to be selective. The market’s gone down a lot? Once again, time to be selective. Perhaps we’re being a bit unfair with our criticism, but it’s been a source of longstanding frustration because we don’t believe it adds anything or helps investors.

At Hilliard Lyons we believe you deserve better advice than “be selective.” Instead, we want to provide you with specific ideas, recommendations, and strategies that will help you achieve your financial goals. Be selective? Sure it sounds good, but as far as this advice being a practical strategy is concerned, please note the first letter of each word.

 


IMPORTANT DISCLOSURES

Each client’s investment needs, risk tolerance, and goals are different. This newsletter is not meant to be advice for any specific investor. Nothing in it should be construed as an offer to sell, or a solicitation of an offer to buy, any securities. This should not be used as the sole basis for an investment decision. Any opinions or estimates are subject to change without notice. For information about how any of this information applies to your personal financial situation, please contact your Wealth Advisor.

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All investing involves risk, including the possible loss of principal. You should carefully consider investment objectives, risks, charges, and expenses of any investment before investing. Diversification and asset allocation do not guarantee a profit or guarantee against a loss.

Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments. The bond market is also volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect can be more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks.