As investors cautiously watch hints of economic improvement, a Tulsa wealth manager sees them reassessing their long-term goals and reordering their investments to match those goals.
“During the crash, people simply pulled in and got very conservative. It was literally financial survival mode for most,” said Bob McCormick, executive vice president and chief operating officer of the Trust Company of Oklahoma. “Now that the economy is improving gradually and the markets have had a nice rally, I am seeing a two-prong approach by investors.
“One is they are refocusing on their long-term objectives, so they are starting to move money back into the stock market. There is still a certain amount of unease, but they are gaining more comfort with moving money back into stocks, but not aggressively.
“The reason they are not aggressive is the second prong. Investors are reassessing their long-term goals and thinking more about how their investments match their goals and more about risk.”
While investors are moving some money back into the stock market, they are also taking cash and moving it the fixed-income market or bonds – government bonds, corporate bonds, high-quality, tax-exempt bonds, McCormick said.
“Quite a bit of money has been moving in that direction,” he said.
Because the money markets are “effectively at zero right now,” McCormick said the bond market offers people a reasonable return on their money while keeping it safe.
“Within the stock market, I do not see a strong stomach for resuming high-risk-type investments,” he said. “People seem to be more focused on quality, on dividend income and on managing the volatility by trying to moderate the big ups and downs.”
He said managing the volatility is especially important for retirees who are living off their investments and have gone through a big down period.
“It can be nearly impossible for them to catch up because they are draining the bathtub faster than they can fill it up,” he said.
Nick Harroz III, president of Mark I Asset Management, an Oklahoma City-based wealth management firm, the status of the recession will become more clear as the year comes to a close.
“We are currently bouncing along the bottom of the recession. We could see a double-dip or we could see a bounce,” he said. “A lot of this will be determined between now and the first of next year, as the markets digest the Christmas data.
Keeping that in mind, he said Tulsa investors should look at investing in metals, mining, technology, energy stocks and mutual funds.
“This will provide Tulsa investors with an excellent opportunity to be positioned in the market when the economy begins to grow again and investment begins to increase,” he said.