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The Story of One Real Account

The Story of One Real Account

June 01, 2022

I started in the financial services business in June of 1986.  I was 22 years old and didn’t really know much about anything.  My first exposure to “losing” money in the stock market was on Black Monday, October 19th, 1987.  It was my brother’s 23rd birthday.  After that, the 1990s seemed pretty good.  Then September 11, 2001, happened and the stock market got hammered.  After that we had the housing bubble burst and the Great Recession of 2008.  Since 3/9/2009 the stock market has pretty much gone straight up with a couple of bumps along the way.

Then 2020 arrived and along with it, the Covid epidemic.  From 2/12/2020 until 3/23/2020 the Dow Jones Industrial Average dropped 37% and trading on the New York Stock Exchange was suspended several times.  As I write this on 5/20/2022 the YTD return on the S&P 500 is -18% which is close to a bear market.  In my last blog post I talked about “losing” money.  Today I want to talk about what happens in real investment portfolios.  I’m going to tell a story about one of my clients who shall remain nameless.

Your Wife Will Never Find Your Body


In December of 2005, one of my clients referred me to his grandfather.  The grandfather had sold some land and had money he wanted to invest.  He needed some income so he could move out of the country and live while he was retired.  I suggested that he invest in a balanced portfolio, and he would receive quarterly dividends and capital gains at the end of the year.  Along with the money he was receiving from Social Security, this would allow him to live a comfortable life.

We met in my client’s conference room, I made my presentation and Grandpa agreed to my recommendation.  I was sitting directly across the table from Grandpa and towards the end of the meeting, he reaches across the table, takes my hands in his soft Grandpa hands, and tells me, son, if anything ever happens to this money, your wife will never find your body. 

Off to a Great Start


Grandpa invested $500,000 and we got off to a great start.  He would get his quarterly dividends and received a capital gain distribution at the end of the year.  By the end of 2007, the value of his account had grown to over $500,000.  Things were going great.  Then 2008 hit!

Oh Shit!!


The Great Recession started in December of 2007 and lasted until June of 2009.  I remember being at a meeting in 2007 and we were starting to hear about the market going down.  Then it seemed like every day there would be red numbers on the television on our lobby that always was showing CNBC.  As an advisor you know you need to hold tight, ride out the storm and over time, things will improve.  When you feel like your life is dependent upon not losing any money, bear market has a whole new meaning. 

I remember reviewing the account with the grandson and him asking WTF was going on.  Grandpa was still getting his dividends and luckily because he was living out of the country, he wasn’t receiving his quarterly statements.  I remember going to one of the grandson’s wedding and Grandpa sees me and starts to walk over to me.  I told my wife, well, this is it.  I have a bunch of life insurance, so I’m sure you’ll be okay!

Grandpa walked up, shook my hand, and told me; you’re doing a great job!  I said, I am??  He told me he got his dividend check in the mail every three months, and he was living like a king.  I doubt there has ever been a time in my entire life where I have been so relieved!

March 9th


On March 9th, 2009, I was in Los Angeles, California at the home office of the American Funds.  They were holding a due diligence meeting for a group of Northwestern Mutual advisors.  The advisors were not in a good mood that day.  The stock market had been sucking for over a year and things were looking bleak.  I clearly remember one of the portfolio managers saying, everything that worked in the past wasn’t working now.  Lucky for me, one of the managers of Grandpa’s account was speaking.  As soon as he finished, I rushed after him, stopped him by the elevator and told him I needed to talk to him.

I’m 6’3” and this dude was about 5’6” on a good day.  He looks up at me and asks, what do you want?  I told him my life was dependent on his ability to manage Grandpa’s account and I needed to know what to say to the grandsons.  He told me, tell them to hang in there.  Don’t do anything.  I’m able to buy things I’ve never been able to buy before.  That day, March 9th, 2009, was the day the market hit its lowest point of the Great Recession.  The S&P 500 finished that day at 676.53.

Hitting the Bottom


Nobody knew that day was the bottom.  There were no flags.  No whistles.  No signs.  Nothing!! The next day, 3/10/2009 the S&P finished at 719.60.  That was a 6.37% increase from the previous day, but you still didn’t realize we were at the start of an amazing bull market.  It wasn’t until months later that people could look back and see Monday the 9th was the start of another bull market. 

What Finally Happened…


Grandpa’s final distribution was 12/21/2016.  In December of 2005 he invested $500,000.  From December of 2005 until December of 2016, he received $267,867.00 in dividends and capital gains.  The amount distributed to his beneficiaries was $601,414.00.  That portfolio allowed him to live a life of dignity and leave a legacy to his beneficiaries.  One of the beneficiaries maintained her half of the account with me.  The other decided to do something else. 

Since December of 2016 when that half of the account was established, the value of the account was $301,935.  Since that time, the new owner has received $119,039.00 in distributions and as of 5/23/2022, the value of the account was $301,394.00. 

In Conclusion


A man sold some land and invested the proceeds with me.  We invested the money into a balanced portfolio with professional money managers.  We lived through one of the greatest recessions in the history of our country.  As the financial advisor, I had many nights waking up worried about my clients.  This one in particular for some odd reason!  But I went to a conference and listened to the money manager.  I relayed that information to the grandsons, and they heeded my advice.  In the end, nobody lost any money.  There definitely was volatility, but they didn’t lose because they didn’t sell.  They held fast and enjoyed the fruits of their tenacity.

I know this is one account.  Everybody is different and every situation is different, but this single account shows in real numbers what investing and staying the course did for one person.  If you want to talk to me about your situation, reach out to me HERE.  As always, thanks for reading!  KB