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35 Years Financial Planning: What Market Cycles Teach Us About Patience

• Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner

Over three decades in financial planning, Newealth has seen booms, busts, bubbles and recoveries. The biggest lesson? Patience pays off.

Market cycles can trigger a rollercoaster of emotions for investors: from optimism to euphoria, panic and despondency. As emotions move in waves, so does the market – and with every downturn comes opportunity.

Since 1991, Newealth Founder Dejan Pekic has seen markets hit rock bottom and bounce back, many times. A Certified Financial Planner, Dejan understands market cycles are best managed with careful planning, strategic investments, and patience.

 

Understanding market cycles

Financial markets are in consistent flux, even when not visibly apparent. There are four phases of market activity: expansion, peak, contraction and trough (which is also the first stage of recovery).

With expansion comes accelerating economic growth. A peak indicates the highest level of economic activity. Contraction is when the market slows, and this is when you will see corporate profits fall, increased unemployment and decreases in consumer spending. During a trough, prices hit their lowest point before economic indicators begin to stabilise. This precedes recovery, when the market begins to move – and the cycle resumes.

Major global events directly impact market cycles, while economic indicators, government policies and investor sentiment contribute to the duration of market cycles. Dejan explains that full financial cycles can sometimes occur in as little as a few years.

“As Benjamin Graham taught us, the busts are continual. When I started in 1991, we were in a recession. This was quickly followed by the bond crash of ’94. Then you had the Asian financial crisis of ’97, the tech wreck of 2000, closely followed by September 11. Just two years later was the second Iraq war. And then the Global Financial Crisis hit in 2008. Jump to 2009 and everything was booming. Since then, we’ve had COVID, Ukraine and Trump, all influencing global markets.”

“As Graham explained, the busts are the big drops, with market falls of 20 percent. And these drops, even though they’re harrowing for everybody, they’re the big opportunities to buy.”

 

Turning market plunges into opportunity

The movement of asset prices has a strong sway on emotions. The anxiety and panic that accompanies market plunges leads many investors to sell and run. According to Dejan however, this is a prime opportunity to refocus your investments.

“As soon as asset prices crash, everybody runs away, not towards the market. When prices are very high, that’s actually the most dangerous time to invest but when these big dislocations occur, when these big asset prices fall, that’s your buying opportunity. So that’s where we’re always operating. We’re very, very active during those exciting periods when everything seems to be going to ruin.”

Market crashes are guaranteed to happen. As a specialist in financial planning and generational wealth management, Newealth knows the market. We help individuals and families stay on track with disciplined and tailored investment strategies, holistic financial services, and long-term support, particularly through volatile market stages. We guide you through financial downturns head on, with clarity and proven investing strategies.

 

Value investing for volatile markets

At Newealth, our approach is grounded in Benjamin Graham’s value investing principles. We help clients plan for long-term financial security and capital preservation with a disciplined margin of safety.

Risk management is a key part of every financial plan. We help you build and protect investments with diversified strategies and acceptable levels of risk.

A diversified strategy incorporates growth assets and defensive assets. Growth assets include shares and property, which can be volatile, but which can generate higher returns over the long term, as well as providing income streams. Defensive assets include fixed interest investments, such as bank term deposits, which generate lower profits than growth assets but are more stable. Defensive assets in isolation may not help you reach long-term financial goals, but they play a key role, especially during market downturns.

“If you’re running a diversified strategy, which is in line with Graham’s thinking, it never pays to sell and run,” explains Dejan. “The market constantly moves up and down, and our job is to help manage that for clients. So, when prices are really high, clients take some of the profit and move it to defensive assets. And we move with the amount of volatility that a client likes.”

With strategic planning and personalised support through the four market stages, we can help you stay on track as you work towards your financial goals, with clarity, and peace of mind.

 

Expert financial planning with clarity and peace of mind

At Newealth, our team take a holistic approach to financial planning, delivering tailored recommendations across superannuation, investment, retirement planning and wealth protection. “And one of the biggest things we’ve done over 35 years is just keep clients out of trouble,” adds Dejan.

As a boutique Sydney financial planner, we provide independent financial advice based on robust research, established investment strategies and 35 years of expertise. We value client relationships, we plan long-term, and we stay with you through market cycles, calmly guiding you through even the toughest periods.

We’ve helped clients stay the course through every market cycle since 1991 — with clarity, discipline and patience. Ready to plan your financial future with confidence? Please feel free to email or call.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

 

General Advice Warning:
The information in this blog is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for you and seek professional advice before making any financial decisions.
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