An Advisor’s Letter to a Wealthy Client

by Rick Ackerman

[A friend who made his fortune in the laundry business has enjoyed enviable returns on his nest egg by staying fully invested in stocks. The following is a personal letter from his financial advisor telling him why, even after the stock market’s spectacular rally since late March, he should stay in equities. The advisor’s list of pros and cons nicely sums up the thinking of many of advisors with wealthy clients, and that’s why I am presenting it here. RA]

Doomsayers always sound smart. I know a few of them who have been wrong for 28 of the last 30 years. I have been positioned very cautiously myself but not outright bearish (thank god, since I would have lost a fortune). Right now I like utilities (defensive, cheap-ish, unloved). I like some healthcare stocks (but worry about the election impacts). I like gold. It’s hard not to want to continue to own Amazon, too, and I do. I’m short regional banks because if there are economic issues it will be in loan markets and in real estate and small-to-medium size businesses. That will hurt the regional banks. I do not own puts on any major equity indices.

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