[email protected]
Ph. 303-768-0007
M.J. Smith & Associates on FacebookMark Smith on LinkedIn

Witnessing the End of an Era

Jacob Jaegle, CFP®
September 17, 2020

As we navigate this unusual year and grapple with uncertainty, we cannot emphasize enough the importance of diversification. It is a message you have heard many times from M.J. Smith & Associates, and Don Calcagni, CFP, MST, the Chief Investment Officer of Mercer Advisors, recently shared his thoughts on the current market with a nod to a well-diversified portfolio. We are here you to help ensure your portfolio serves your needs now and in the future.

From Don Calcagni, CFP, MST
Chief Investment Officer, Mercer Advisors

We’re witnessing the end of an era.  Recently it was announced that, after nearly a century, Exxon Mobil would be dropped from the Dow Jones Industrial Average.  It was added back in 1928 and was at one time the largest publicly traded company in the world.  It will be replaced with software giant Salesforce.com, a change that is emblematic of how significantly the US economy has changed from its days as the world’s industrial powerhouse to one dominated by technology and services. The news comes on the heels of Exxon’s staggering -38.08% YTD return.

All companies go through a lifecycle. While there’s still a chance Exxon my rejoin ranks of the Dow at some point in the future, the message to investors should be clear: even big, quasi-monopolistic companies fall from grace. Exxon is just the latest old-school company to be removed from the Dow. General Electric, once deemed the best managed company in the world, was removed in 2018. Philip Morris (Altria)—the best performing stock of the 20th century according to Professor Jeremy Siegel—was removed from the Dow in 2008.

Some market leaders enter bankruptcy. Others are acquired. Some even go out of business entirely. Sears and Polaroid come to mind but there are others, even in the explosive technology space (e.g., Netscape, Yahoo). Others reinvent themselves to go on to become market leaders again (e.g., Apple, Dell). But because capitalism is so dynamic, market leadership is often fleeting, even for companies with high degrees of monopoly power. Companies know this. To protect their market position, many companies fight hard to build “barriers to entry” by buying out threatening upstarts and hiring armies of Washington lobbyists to secure preferential treatment from government. But even that typically isn’t enough to remain perpetually at the top. In the forest, all giants eventually fall.

The moral of the story? Diversify, diversify, diversify. No matter how in love investors may be with a specific company; no matter how compelling a company’s story; no matter how dominate a company’s market position. There is simply no substitute for well-diversified portfolio.

Thank you for your feedback!
Sorry - something went wrong. Please try again or call us at 303-768-0007.
Avoid the Headache of Giving the Wrong Person Your Estate

While it's common to get financial plans reviewed regularly, estate plans are often less likely to get an annual checkup. Here are four easy steps you can take to ensure your wealth goes to your heirs of choice.

Read More
M.J. Smith & Associates Joins Mercer Advisors

We have exciting news that M.J. Smith & Associates is now part of the Mercer Advisors wealth management firm. Read more in this post.

Read More
What If the Market Goes Down Again?

As of this writing, the markets hit a low point for 2020 on March 23. While we hope the lowest point is behind us, we know and understand that the current market shifts can be nerve wracking for investors. This post outlines some important points to consider if you’re concerned.

Read More
Avoid the Headache of Giving the Wrong Person Your Estate

While it's common to get financial plans reviewed regularly, estate plans are often less likely to get an annual checkup. Here are four easy steps you can take to ensure your wealth goes to your heirs of choice.

Read more
M.J. Smith & Associates Joins Mercer Advisors

We have exciting news that M.J. Smith & Associates is now part of the Mercer Advisors wealth management firm. Read more in this post.

Read more
Avoid the Headache of Giving the Wrong Person Your Estate

While it's common to get financial plans reviewed regularly, estate plans are often less likely to get an annual checkup. Here are four easy steps you can take to ensure your wealth goes to your heirs of choice.

Read more

Questions?

Contact Us

Receive all of our firm's resources as soon as they become available:

Thank you!
Your submission has been received.
Oops! Something went wrong while submitting the form. Please try again or email [email protected]
Raymond James Privacy Notice
This is some text inside of a div block.