CONWAY WEALTH GROUP

The Broader View Is Brighter When

You Pull Back The Lens
Investing is a long-term exercise, and although selloffs like this are scary,
we should be looking at our long-term plans and long-term potential for
portfolio growth.
To say that the last few weeks have been challenging is we should be looking at our long-term plans and long-term
perhaps the greatest understatement ever. Global markets potential for portfolio growth.
are roiling as the novel coronavirus pandemic continues to
As the great investor Benjamin Graham once said, “The
pick up steam, forcing schools and businesses to close,
investor who permits himself to be stampeded or unduly
interrupting daily life, and causing anxiety among investors
worried by unjustified market declines in his holdings is
who are forced to watch volatile market fluctuations day after
perversely transforming his basic advantage into a basic
day–all while we’re confined to our homes without
disadvantage.” Graham went on to say that many individuals
constructive outlets to ease these concerns.
fail as long-term investors because “they pay too much
During times like these, it is very difficult to keep things in attention to what the stock market is doing currently.”
perspective when it feels like the world is burning around us. Ultimately, he felt that intelligent investors were patient,
And yet, that’s exactly what we should be doing. Investing is independent, and exerted self-control during difficult times.1
a long-term exercise, and although selloffs like this are scary,

To illustrate Graham’s points, let’s look at a few investment examples historically.

Investment 1 Investment 2
0% 0%

-10%
-5%

-20%
Total Return

Total Return

-10%
-30%
-15%
-40%

-20%
-50%

-60% -25%
Source: Koyfin Source: Koyfin
Koyfin Koyfin

Investment advisory and financial planning services offered through Summit Financial, LLC, an SEC Registered Investment Adviser, doing business as Conway
Wealth Group, LLC. Securities brokerage offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC Headquartered at 18 Corporate Woods
Blvd., Albany, NY 12211 (“PKS”). PKS and Summit Financial, LLC, are not affiliated companies.
 April 2020

By holding a diversified portfolio that matches risk tolerance and making rational
decisions that are focused on long-term goals, investors improve their likelihood
for success.

Objectively, the above examples appear to be poor S&P 500 (Investment 2)

0%
investments. If these investments were sold at the end of the
periods represented on the charts, returns would have been -5%

-55% and -20%, respectively. The next chart illustrates an

-10%

Total Return
investment with a more favorable outcome than the prior two
examples: -15%

-20%
Investment 3
140%
-25%
120%
100%

18

18

18

18

18

18

18

18
8

8
/1

/1

/1

/1

/1

/1
1/

8/

5/

5/

2/

9/

3/

0/
20

27

/4

/1

/8

/6
80%

/1

/1

/2

/1

/2

/2

/1

/2
10

11

11

12
9/

9/

10

10

10

11

11

11

12

12
Total Return

60%
40% Koyfin
20%
0%
-20%
-40%
-60%
-80%
S&P 500
140%
07

08

09

10

11

12

13

14

15

16

17

18

19

120%
1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/
/3

/3

/3

/3

/3

/3

/3

/3

/3

/3

/3

/3

/3

100%
12

12

12

12

12

12

12

12

12

12

12

12

12

Source: Koyfin 80%

Koyfin 60%
Total Return

“Investment 2”
40%
20%
“Investment 1”
0%
Investment 3 looks to be leaps and bounds better than -2 0%
-4 0%
Investment 1 and 2. What’s most interesting about these -6 0%
-8 0%

investment options is they’re actually the same underlying

07

08

09

10

11

12

13

14

15

16

17

18

19
1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/
/3

/3

/3

/3

/3

/3

/3

/3

/3

/3

/3

/3

/3
12

12

12

12

12

12

12

12

12

12

12

12

12
stock index, the S&P 500, but over different time periods. Source: Koyfin
Koyfin

S&P 500 (Investment 1) The purpose of these illustrations is to show that over shorter
0%
time periods, assets will fluctuate in value and could have
-10%
extremely negative performance. In fact, periods of market
-20% declines are more common than we may think. Since 1980,
Total Return

there have been 12 corrections (stock declines of 10% or

-30%
more), 8 bear markets (declines of 20% or more), and 5
-40%
recessions.2
-50%
Herein lies the importance of “pulling back the lens.” Although
-60% it is never ideal to see negative performance in an investment
07

08

08

08
8

9
/0

/0

/0

/0

/0

/0

/0

/0

/0

/0

/0

portfolio, we know that periods like this occur and that

1/

1/

0/

1/
31

29

31

30

31

30

31

31

30

31

28
/3

/3

/3

/3
1/

2/

3/

4/

5/

6/

7/

8/

9/

1/

2/
12

10

11

12

Koyfin historically, markets tend to grow over the long-term. This is

exactly why we maintain a long-term horizon when investing.

1 Zweig, Jason. “What Benjamin Graham Would Tell You to Do Now: Look in the Mirror.” The Wall Street Journal. Dow Jones & Company, March 10, 2020. https://www.wsj.com/articles/
what-benjamin-graham-would-tell-you-to-do-now-look-in-the-mirror-11583797707.
2 “Talk to Clients about Market Downturns: Vanguard Advisors.” Talk to clients about market downturns | Vanguard Advisors, January 27, 2020. https://advisors.vanguard.com/insights/
article/talktoclientsaboutmarketdownturns.

2 THE BROADER VIEW IS BRIGHTER WHEN YOU PULL BACK THE LENS / CONWAY WEALTH GROUP
 April 2020

Frequency of Positive Total Returns Historically, the longer an investor maintained their allocation,
the greater the chances the portfolio offered positive returns.
While the odds of positive returns equate to a coin flip each
trading day, we feel that over time, the portfolios we’ve
implemented will show positive results. While investors focus
on darker snapshots in time that prove painful, pulling back
the lens most often shows a much brighter picture. As
Winston Churchill would explain, “If you’re going through hell,
Bloomberg, YCharts
keep going.”

By holding a diversified portfolio that matches risk tolerance

and making rational decisions that are focused on long-term
goals, investors improve their likelihood for success.

Disclaimer
Past performance is no guarantee of future results. All investing is subject to risk, including the possible loss of money you invest. Fluctuations
in financial markets could cause declines in the values of your account. There is no guarantee that any particular asset allocation will meet
your objectives.

Various asset classes are represented by the following indices using data from certain dates (in parenthesis) up to the end of December 2019:

US Large Cap – S&P 500 Index (January 1950), International Developed – EAFE Equity (January 1970), Emerging Markets – MSCI Emerging
Market Index (January 1988), US Aggregate Bonds – Bloomberg Barclays US Aggregate (April 1996)

Past performance does not guarantee future results, which may vary. The indices are unmanaged and the figures for the Index reflect the
reinvestment of dividends, but do not include any deduction for fees, expenses or taxes.

Summit Financial, LLC. is a SEC Registered Investment Adviser (“Summit”), headquartered at 4 Campus Drive, Parsippany, NJ 07054,
Tel. 973-285-3600. It is provided for your information and guidance and is not intended as specific advice and does not constitute an offer
to sell securities. Summit is an investment adviser and offers asset management and financial planning services. Indices are unmanaged
and cannot be invested into directly. Data in this report is obtained from sources which we, and our suppliers, believe to be reliable, but we
do not warrant or guarantee the timeliness or accuracy of this information. Consult your financial professional before making any investment
decision. Past performance is no guarantee of future results. Diversification/asset allocation does not ensure a profit or guarantee against a loss.

04072020-372

Investment advisory and financial planning services offered through Summit Financial, LLC, an SEC Registered Investment Adviser, doing business
as Conway Wealth Group, LLC. Securities brokerage offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC Headquartered at
18 Corporate Woods Blvd., Albany, NY 12211 (“PKS”). PKS and Summit Financial, LLC, are not affiliated companies.