(Matson Money) Now is the time to be in action.
While current events and dialogue from the media may be provoking fear and panic for some investors, at Matson Money, our message is unwavering: it is never the right time to panic.
“It would be easy to see the triple threat of war, recession, and inflation as a warning sign to get out of the market,” said Mark Matson, Founder, and CEO of Matson Money. “This would be a terrible mistake.”
History has shown us that while war, recession, and a wavering economy can cause market volatility, they have not been destructive in the long term.
“We are aware of the bad news and are doing the right thing anyway,” said Matson. “Courage is not the absence of fear, courage is the experience of fear and doing the right thing anyway.”
Watch the video below for a Mark Matson news update on how to protect the future you and your clients are creating together, even in volatile circumstances.
Given today’s headlines, what’s an investor to do?
“The reality is, talking about inflation and having to live through it, talking about war and having to live through it, and talking about recession and having to actually live through it – and not panic – are two different things.”
Despite being prepared for market volatility, it is natural for investors to worry. But succumbing to the natural instinct to panic can have a catastrophic impact on the future for investors.
“Every investor, big or small, must deal with one thing that no one else can deal with, and that is their own mindset because investing will never be easy,” said Matson. “Investing may be one of the most difficult things you’ll ever do because it entails being able to do a journey into self, and recognizing when fear, instincts, and blind spots can cause imprudent behavior that could actually destroy your dreams.”
Human beings are not hardwired for these obstacles. “As a matter of fact, our brain is very great at running away from saber tooth tigers,” said Matson. “But the amygdala gets hijacked and gets lit up because of stress, anger, and fear, making it easy to overreact and do the wrong thing.”
With high levels of anxiety, stress, and fear, there are three natural responses: run, fight or play dead. And when it comes to investing, every one of these can be destructive.
To combat these potentially hazardous responses, investors should work with their advisor coach.
“Your coach is your secret weapon against your amygdala, your instincts, and your emotions taking over and causing you to have destructive behaviors,” said Matson.
Advisor coaches who work with Matson Money are educated in human behavior science and coach investors to stay disciplined and prudent with investments over a lifetime.
“As afraid as you might be, no one can tell you anything specifically about the outcome,” Matson said. “Many people will speculate, but as an investor planning for your retirement and planning for your family’s dreams, it is critical to take the long view, to focus on what you can control – which is your discipline and your courage over time – and your dedication to the design of your academically tested portfolio.”
Let go of what you can’t control.
“If you look at your own life and through history itself, you’ll see that it didn’t come to stay, it came to pass. And this too shall pass.”
Markets recover.
“Markets are efficient, meaning that they are forward-looking – meaning that all of the knowable and predictable information about the future is factored into prices today,” Matson said. “Therefore, only unknowable and unpredictable information going forward will affect prices.”
Historically, looking at the market through the lens of the long-term, the market has always recovered.
“No one can tell you where the next 20% is going to be, but what we do know is, historically, the next 100% in the market is up,” Matson said. “And it’s been that way through wars, recessions, depressions, external threats, and internal threats.”
What investors can do to take action now is own equities, diversify, and rebalance.
“The people that are smart enough, brave enough, and wise enough to actually buy things while they’re down, historically fare much better than the people that panic when they drop.”
And when everything is uncertain, anything is possible.
“If you look throughout history, there have always been periods of chaos, fear, pain, and struggle,” said Matson. “But they were always followed by peace, tranquility, bravery, and courage in the face of fear.”
If you have any questions or are looking to become an advisor coach or are looking for an advisor coach, please connect with us.
Watch the full Mark Matson news update now.
Description of Matson Money, Inc.
Matson Money, Inc. “Matson” is a federally registered investment advisor with the Securities Exchange Commission (“SEC”) and has been in business since 1991. In Canada, Matson is registered as a portfolio manager in Ontario and British Columbia. Registration with the SEC and the Canadian securities regulatory authorities does not imply their approval or endorsement of any services provided by Matson. This presentation is based on the views of Matson. The concepts discussed herein are for educational purposes only. It includes the opinions, beliefs, or viewpoints of Matson Money and its Co-Advisors and should not be relied upon for entering into any transaction, advisory relationship, or making any investment decision. Other organizations or persons may analyze investments and the approach to investing from a different perspective than that reflected in this presentation. Nothing included herein is intended to infer that the approach to investing discussed in this presentation will assure any particular investment results.
All of Matson Money’s advisory services are marketed almost exclusively by either Solicitors or Co-Advisors (“Promoters”). The term “Co-Advisor” is equivalent in meaning to the term “Promoter.” Co-Advisors are either unaffiliated separately registered investment advisors, or registered representatives and/or investment advisor representatives of unaffiliated dual registrant brokerage firms. Matson is not affiliated with the Co-Advisors or the firms with which they are associated. Each Co-Advisor enters into a contractual agreement to serve as a non-discretionary Co-Advisor with respect to clients referred by the Co-Advisor to Matson. Solicitors typically do not enter into investment management agreement with clients. Both Co-Advisors and Solicitors have similar responsibilities including promoting and referring clients, and client coaching, including maintaining suitability information, routine service issues, and relationship management. All Co-Advisors are independent contractors, not employees or agents of Matson. Co-Advisors are paid fees as set forth under the tri-party Investment Management Agreement. Such fees are negotiable and may range from .20% to 1.2% of Account Owner assets under management. Matson does not retain any portion of these fees and is compensated only through advisory fees embedded in the Matson Funds.
The Co-Advisor receives an annual fee, paid quarterly in advance by Matson, based on total assets under management of the Co-Advisor’s clients. Generally, the greater the assets under management that the Co-Advisor’s clients have, the higher their annual compensation will be. Due to this compensation arrangement, the Co-Advisor has a financial incentive to promote Matson in lieu of other financial services providers, which results in a material conflict of interest.
Account Owners referred by other Co-Advisors may pay lower advisory fees for comparable services as a result of the range of fees available at each asset level breakpoint.
Co-Advisor’s fee may be paid directly by Account Owner to Co-Advisor or this fee may be deducted from Account Owner’s account by Matson and paid by Matson to Co-Advisor. No part of this fee is retained by Matson. The Co-Advisor’s relationship with Matson, including fees payable from the Account Owner’s Account, is governed by a separate agreement between Matson and the Co-Advisor. The nature of this relationship creates an inherent conflict of interest.
In Canada, Matson acts as a sub-advisor to another registered portfolio manager (“Advisor”). Matson is not affiliated with the Advisor. The Advisor and Matson have entered into a sub-advisory agreement, under which Matson has agreed to sub-advise client accounts managed by the Advisor. Client accounts are invested in strategies managed by Matson. The Advisor is responsible for client onboarding and account opening collection of know-your-client information and suitability determination and overall client relationship management.
All investing involves risks and costs. Your advisor can provide you with more information about the risks and costs associated with specific programs. Your advisor is not affiliated with Matson Money, Inc. The information contained in this material is for educational purposes only and is not intended as investment advice. No investment strategy (including asset allocation and diversification strategies) can ensure peace of mind, guarantee profit, or protect against loss.
The presentation includes data, graphs, charts or other material reflecting the performance of a security, an index, an investment vehicle, a composite or other instrument over time (“Performance Material”). Past performance, and any performance reflected in Performance Material, is not an indication of future results.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS
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Matson Money Investment Philosophy
Matson Money believes that the stock market is efficient and that free markets work. Based on this belief, Matson focuses on attempting to capture market returns utilizing asset class or structured funds, seeks to utilize broad diversification, and attempts to eliminate stock picking, track record investing, and market timing from the investment process.
Matson Money manages client investments utilizing a fund-of-funds strategy. Client accounts are invested in a mix of a proprietary series of mutual funds advised by Matson, which allocate investments across three broad asset classes: domestic equity, international equity, and fixed income. Matson-advised funds seek to allocate across these broad asset classes by investing in various mutual funds or ETFs. The specific target allocation of each client’s Matson-advised strategy depends on the individual investor’s risk tolerance and investment horizon, and is selected by the client at account opening. More information on mutual funds, ETFs, and associated fees, is available in fund prospectus documents, available online at: http://funddocs.filepoint.com/matsonmoney/.
Fund of Funds Risk. The investment performance of client portfolios is affected by the investment performance of the underlying funds in which the portfolio is invested. The ability of the total client portfolio to achieve its investment objective depends on the ability of the underlying Matson-advised mutual funds to meet their investment objectives, on Matson’s decisions regarding the allocation of the portfolio’s assets among the underlying Matson-advised mutual funds, and on Matson’s decisions regarding investments made by the underlying Matson-advised mutual funds. The portfolio may allocate assets to an underlying fund or asset class that underperforms other funds or asset classes. There is no assurance that the investment objective of the portfolio or any underlying fund will be achieved. When the portfolio invests in underlying funds, investors are exposed to a proportionate share of the expenses of those underlying funds in addition to the expenses of the portfolio. Matson may receive fees both directly on your account as well as on the money your account invests in the underlying funds, and the underlying funds themselves may bear expenses of the mutual funds or ETFs in which they invest. Through its investments in the underlying funds, the portfolio is subject to the risks of the underlying funds’ investments, with certain underlying fund risks described later in this presentation. More information on mutual funds, ETFs, and associated fees, is available in fund prospectus documents, available online at: http://funddocs.filepoint.com/matsonmoney/.
Risks of Investing in International Equities
Matson Money utilizes international equities in its investment strategies. These asset categories are held by clients both directly and indirectly, with various sub-categories (large value, small value international, emerging markets, etc.). Because the value of client investments with Matson will fluctuate, there is risk that you will lose money. The following is a description of the principal risks of investing in international equities, including emerging markets:
Equity Market Risk: Even a long-term investment approach cannot guarantee a profit or prevent a loss. Economic, market, political, and issuer-specific conditions and events, known as market risks, will cause the value of equity securities, and the investment strategies that own them, to rise or fall which will cause the value of your equity portfolio to rise fall. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
Foreign Securities and Currencies Risk: Foreign securities prices may decline or fluctuate because of: (a) economic or political actions of foreign governments, and/or (b) less regulated or liquid securities markets. Investors holding these securities are also exposed to foreign currency risk (the possibility that foreign currency will fluctuate in value against the U.S. dollar or that a foreign government will convert, or be forced to convert, its currency to another currency, changing its value against the U.S. dollar).
Emerging Markets Risk: Numerous emerging market countries have a history of, and continue to experience serious, and potentially continuing, economic and political volatility. Stock markets in many emerging market countries are generally relatively small, expensive to trade in and have higher risks than those in developed markets. Securities in emerging markets also may be less liquid than those in developed markets and foreigners are often limited in their ability to invest in, and withdraw assets from, these markets. Additional restrictions may be imposed under other conditions. Frontier market countries generally have smaller economies or less developed capital markets and, as a result, the risks of investing in emerging market countries are magnified in frontier market countries.
International Small Company Risk: Securities of small public companies with a total market capitalization (market value) of $300M to $2B are known as small-cap companies. Small-cap companies are often less liquid than those of large companies which can make it difficult to sell the securities of small-cap companies at a desired time or price. As a result, small-cap company stocks may fluctuate relatively more in price. In general, these companies are also more vulnerable than larger companies to adverse business or economic developments and they may have more limited resources. Because of lower daily trading volumes, trading costs for small stocks are higher. Trading costs result from both direct commissions and the price movements caused by buying or selling shares.
International Value Investment Risk. Value stocks are stocks of publicly traded companies that tend to trade at a “value price” compared to a company’s financials. These stocks may perform differently from the market. Following a value-oriented investment strategy may cause client portfolios to underperform equity investment strategies.
Equity Market Risk: Even a long-term investment approach cannot guarantee a profit or prevent a loss. Economic, market, political, and issuer-specific conditions and events, known as market risks, will cause the value of equity securities, and the investment strategies that own them, to rise or fall which will cause the value of your equity portfolio to rise or fall. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
Small Company Risk: Securities of small public companies with a total market capitalization (market value) of $300M to $2B are known as small-cap companies. Publicly traded companies with a total market capitalization (market value) of $50M to $300M are known as micro-cap companies. Both small-cap and micro-cap companies are often less liquid than those of large companies which can make it difficult to sell the securities of small-cap or micro-cap companies at a desired time or price. As a result, small-cap and micro-cap company stocks may fluctuate relatively more in price. In general, these companies are also more vulnerable than larger companies to adverse business or economic developments and they may have more limited resources.
Because of lower daily trading volumes, trading costs for small stocks are higher. Trading costs result from both direct commissions and the price movements caused by buying or selling shares.
Value Investment Risk. Value stocks are stocks of publicly traded companies that tend to trade at a “value price” compared to a company’s financials. These stocks may perform differently from the market. Following a value-oriented investment strategy may cause client portfolios to underperform equity investment strategies.
Liquidity Risk: Generally speaking, small and micro-cap stocks are subject to greater liquidity risk. When liquidity risk is elevated, the security being purchased or sold becomes more expensive than a security that is readily available in the marketplace.
Volatility Risk: Generally speaking, small and micro-cap stocks are subject to greater volatility risk. When volatility risk is elevated, the price of a security may fluctuate rapidly in a short period of time.
Market Uncertainty: Small and micro-cap stocks are subject to market uncertainty. Factors such as geopolitical disturbances, economic fluctuations, politics, international relations, and various business cycles all produce market uncertainty. Market uncertainly does inform the stock price.
Risks of Investing in Fixed Income
Matson Money utilizes fixed income asset categories in its investment strategies. These asset categories are held by clients indirectly through mutual funds, with various sub-categories (large value, small value international, emerging markets, etc.). Because the value of client investments with Matson will fluctuate, there is risk that you will lose money. The following is a description of the principal risks of investing in fixed income cap securities:
Market Risk: Even a long-term investment approach cannot guarantee a profit. Economic, political, and issuer-specific events will cause the value of fixed income securities owned by Matson portfolios to rise or fall. As a result, the value of your portfolio may rise or fall if it includes fixed income securities.
Credit Risk: Credit risk is the risk that the issuer of a security may be unable to make interest payments and/or repay principal when due. A downgrade to an issuer’s credit rating or a perceived change in an issuer’s financial strength may affect a security’s value, and thus, impact the investment portfolio’s performance. Government agency obligations have different levels of credit support and, therefore, different degrees of credit risk. Securities issued by agencies and instrumentalities of the U.S. Government are supported by the full faith and credit of the United States, such as the Federal Housing Administration and Ginnie Mae, present credit risk that is generally lower than other securities issued by other state or local agencies, or other public or private entities. Other securities issued by agencies and instrumentalities sponsored by the U.S. Government, that are supported only by the issuer’s right to borrow from the U.S. Treasury, subject to certain limitations, and securities issued by agencies and instrumentalities sponsored by the U.S. Government that are sponsored by the credit of the issuing agencies, such as Freddie Mac and Fannie Mae, are subject to a greater degree of credit risk. U.S. government agency securities issued or guaranteed by the credit of the agency still involve a risk of non-payment of principal and/or interest.
Interest Rate Risk: Fixed income securities are subject to interest rate risk because the prices of fixed income securities tend to move in the opposite direction of interest rates. When interest rates rise, fixed income security prices fall. When interest rates fall, fixed income security prices rise. In general, fixed income securities with longer maturities are more sensitive to changes in interest rates.
Foreign Securities and Currencies: Foreign securities prices may decline or fluctuate because of: (a) economic or political actions of foreign governments, and/or (b) less regulated or liquid securities markets. Investors holding these securities are also exposed to foreign currency risk (the possibility that foreign currency will fluctuate in value against the U.S. dollar or that a foreign government will convert, or be forced to convert, its currency to another currency, changing its value against the U.S. dollar).
Foreign Government Debt Risk: The risk that: (a) the governmental entity that controls the repayment of government debt may not be willing or able to repay the principal and/or to pay the interest when it becomes due, due to factors such as political considerations, the relative size of the governmental entity’s debt position in relation to the economy, cash flow problems, insufficient foreign currency reserves, the failure to put in place economic reforms required by the International Monetary Fund or other multilateral agencies, and/or other national economic factors; (b) governments may default on their debt securities, which may require holders of such securities to participate in debt rescheduling; and (c) there is no legal or bankruptcy process by which defaulted government debt may be collected in whole or in part.
For more information, please see the Matson Money Form ADV Part 2A.
Specific Risk:Specific risk, also known as nonsystematic risk is unique risk that is local or limited to a particular asset or industry that does not necessarily affect assets outside of that asset class. An example is news that affects a specific stock such as a sudden strike by employees. Diversification is a key way to help protect yourself from nonsystematic risk. Matson Money clients are invested in securities with broad diversification in an attempt to eliminate nonsystematic risk, however, clients may still be subject to specific risk inside individual asset classes (micro-cap, emerging markets, etc.)
Country Specific Market Risk: Because [individual country’s name] index concentrates investments in that specific market, the [individual ’s country’s name] performance is expected to be closely tied to the social, political and economic conditions within that country, and is expected to be more volatile than the performance of funds with more geographically diverse investments.
Credit Risk: Credit risk is the risk that the issuer of a security may be unable to make interest payments and/or repay principal when due. A downgrade to an issuer’s credit rating or a perceived change in an issuer’s financial strength may affect a security’s value, and thus, impact the investment portfolio’s performance. Government agency obligations have different levels of credit support and, therefore, different degrees of credit risk. Securities issued by agencies and instrumentalities of the U.S. Government are supported by the full faith and credit of the United States, such as the Federal Housing Administration and Ginnie Mae, present credit risk that is generally lower than other securities issued by other state or local agencies, or other public or private entities. Other securities issued by agencies and instrumentalities sponsored by the U.S. Government, that are supported only by the issuer’s right to borrow from the U.S. Treasury, subject to certain limitations, and securities issued by agencies and instrumentalities sponsored by the U.S. Government that are sponsored by the credit of the issuing agencies, such as Freddie Mac and Fannie Mae, are subject to a greater degree of credit risk. U.S. government agency securities issued or guaranteed by the credit of the agency still involve a risk of non-payment of principal and/or interest.
Cyber Security Risk: Matson Money and its service providers’ use of internet, technology and information systems may expose the investment advisor to potential risks linked to cyber security breaches of those technological or information systems. Cyber security breaches, amongst other things, could allow an unauthorized party to gain access to proprietary information, customer data, or fund assets, or cause the investment advisor and/or its service providers to suffer data corruption or lose operational functionality.
Emerging Markets Risk: Numerous emerging market countries have a history of, and continue to experience serious, and potentially continuing, economic and political volatility. Stock markets in many emerging market countries are generally relatively small, expensive to trade in and have higher risks than those in developed markets. Securities in emerging markets also may be less liquid than those in developed markets and foreigners are often limited in their ability to invest in, and withdraw assets from, these markets. Additional restrictions may be imposed under other conditions. Frontier market countries generally have smaller economies or less developed capital markets and, as a result, the risks of investing in emerging market countries are magnified in frontier market countries.
Equity Market Risk: Even a long-term investment approach cannot guarantee a profit or prevent a loss. Economic, market, political, and issuer-specific conditions and events, known as market risks, will cause the value of equity securities, and the investment strategies that own them, to rise or fall which will cause the value of your equity profile to rise or fall. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
Foreign Government Debt Risk: The risk that: (a) the governmental entity that controls the repayment of government debt may not be willing or able to repay the principal and/or to pay the interest when it becomes due, due to factors such as political considerations, the relative size of the governmental entity’s debt position in relation to the economy, cash flow problems, insufficient foreign currency reserves, the failure to put in place economic reforms required by the International Monetary Fund or other multilateral agencies, and/or other national economic factors; (b) governments may default on their debt securities, which may require holders of such securities to participate in debt rescheduling; and (c) there is no legal or bankruptcy process by which defaulted government debt may be collected in whole or in part.
Foreign Securities and Currencies Risk: Foreign securities prices may decline or fluctuate because of: (a) economic or political actions of foreign governments, and/or (b) less regulated or liquid securities markets. Investors holding these securities are also exposed to foreign currency risk (the possibility that foreign currency will fluctuate in value against the U.S. dollar or that a foreign government will convert, or be forced to convert, its currency to another currency, changing its value against the U.S. dollar).
Fund of Funds Risk: The investment performance of client portfolios is affected by the investment performance of the underlying funds in which the portfolio is invested. The ability of the total client portfolio to achieve its investment objective depends on the ability of the underlying Matson-advised mutual funds to meet their investment objectives, on Matson’s decisions regarding the allocation of the portfolio’s assets among the underlying Matson-advised mutual funds, and on Matson’s decisions regarding investments made by the underlying Matson-advised mutual funds. The portfolio may allocate assets to an underlying fund or asset class that underperforms other funds or asset classes. There is no assurance that the investment objective of the portfolio or any underlying fund will be achieved. When the portfolio invests in underlying funds, investors are exposed to a proportionate share of the expenses of those underlying funds in addition to the expenses of the portfolio. Matson may receive fees both directly on your account as well as on the money your account invests in the underlying funds, and the underlying funds themselves may bear expenses of the mutual funds or ETFs in which they invest. Through its investments in the underlying funds, the portfolio is subject to the risks of the underlying funds’ investments, with certain underlying fund risks described later in presentation. More information on mutual funds, ETFs, and associated fees, is available in fund prospectus documents, available online at: http://funddocs.filepoint.com/matsonmoney/.
Interest Rate Risk: Fixed income securities are subject to interest rate risk because the prices of fixed income securities tend to move in the opposite direction of interest rates. When interest rates rise, fixed income security prices fall. When interest rates fall, fixed income security prices rise. In general, fixed income securities with longer maturities are more sensitive to changes in interest rates.
Market Risk: Even a long-term investment approach cannot guarantee a profit or prevent a loss. Economic, political, and issuer-specific events, known as market risks, will cause the value of fixed income securities to rise or fall.
Small Company Risk: Securities of small public companies with a total market capitalization (market value) of $300M to $2B are known as small-cap companies. Publicly traded companies with a total market capitalization (market value) of $50M to $300M are known as micro-cap companies. Both small-cap and micro-cap companies are often less liquid than those of large companies which can make it difficult to sell the securities of small-cap or micro-cap companies at a desired time or price. As a result, small-cap and micro-cap company stocks may fluctuate relatively more in price. In general, these companies are also more vulnerable than larger companies to adverse business or economic developments and they may have more limited resources.
Value Investment Risk: Value stocks are stocks of publicly traded companies that tend to trade at a “value price” compared to a company’s financials. These stocks may perform differently from the market. Following a value-oriented investment strategy may cause client portfolios to underperform equity investment strategies.
Three Factor Model
Fama, Eugene F. and Kenneth R. French. “The Cross-Section of Expected Stock Returns,” Journal of Finance, 47, June 1992.
Efficient Market Theory
Eugene F. Fama, “Random Walks in Stock Market Prices,” Financial Analysts Journal, September/October 1965.
Modern Portfolio Theory
Markowitz, Harry. Portfolio Selection: Efficient Diversification of Investments. New York. Wiley. 1959. Print.
“The concepts discussed herein are for educational purposes only. It includes the opinions, beliefs, or viewpoints of Matson Money and its Co-Advisors and should not be relied upon for entering into any transaction, advisory relationship, or making any investment decision. Other organizations or persons may analyze investments and the approach to investing from a different perspective than that reflected in this presentation. Nothing included herein is intended to infer that the approach to investing discussed in this presentation will assure any particular investment results.”
