Election Year Volatility: Managing the Risk of Market Decline EverydayCPA Show | Business Owners | Self-Employed | Households | Tax | Budgeting | Savings

Date:      August 9, 2019
Attendee and Guest:   Kelly Coughlin, CEO, EveryDay CPA – Kirk Chisholm, President – Innovative Wealth &                                                                     InnovativeAdvisory Group  
Good morning everybody, this is Kelly Coughlin, CEO and CPA of EveryDay CPA, providing star services of strategy, tax, accounting and risk management services to businesses and business owners.
 Today I am going to interview the CEO of a very interesting wealth management firm.  He specializes in two primary areas, using alternative investments like real estate to complement a traditional portfolio of stocks, bonds, and cash, and the second is creating a traditional portfolio of stocks, bonds, and cash, but complementing that portfolio with what we call inverse correlated assets.  An inverse correlation, also known as negative correlation, is a contrary relationship between two variables, so they move in opposite directions.  Or, to put it simply, when one bucket of assets goes up in value the other doesn’t go up or doesn’t go down.  And when taken in combination, they together produce a good and reasonable rate of return. The popularity of this type of strategy has been growing substantially in the past four or five years and used by institutional investors for many, many years.  But on T.V. you could see ads like crash proof retirement, which at their core simply used insurance annuities to offload the risk to insurance companies.  But then you will also see guys like Ken Fisher saying, Never ever hold an annuity.   It’s no wonder the people are confused, but in steps, my guess today, Kirk Chisholm, President of Innovative Wealth and Innovative Advisory Group.  Kirk, how are you today?
 Kirk:     I am doing great Kelly.    I am doing awesome on this wonderful Sunday morning.
 Kelly:   Great.  And we already discussed, your kids are going to the water park?
 Kirk:     Yes, yeah.
 Kelly:   I have been to Kirk’s swimming club in the Boston area and - he has to pay a membership for that, and now his kids want to go out and spend another 50 bucks today, right?
 Kirk:     Fifty bucks, Kelly, you don’t live in the Boston area, do you?  That would be nice if it was only 50.  The cost of happy three kids.
 Kelly:   Kirk has a lovely wife that I have met, and I am sure there is, “Can’t we just go to the club, and it is right around the street”, and you lose that argument, right?
 Kirk:     Yeah, every single time.
 Kelly:   Great. Well, I have known Kirk for many years, folks, and his firm.  And in fact, we have liked each other so much we decided to start working together.  You might ask, why would an accounting firm do work with a wealth management firm?  Sometimes people pit the two as arch enemies.  Well, Kirk and I certainly are not.  But here is how it fits into my company, EveryDay CPA, we do four primary things here, we call it our Star services, S T A R, Strategy, namely business strategy, Tax, Accounting and Risk Management.  And this work with Kirk and Innovate Wealth is the key element of the R component, the risk component of the STAR system.  And the reason I am doing this podcast now, today, at this moment is because it is especially important.  There are two things going on. Number one, we are at some point in the continuum of the Trump Rally and two, we have a presidential election coming up next year.
First, the Trump Rally.  The market is up about 37% since Trump’s election.  Now, note that at this point in Obama’s presidency, that is, at this point in the number of days of his presidency the market was up 52%.  And ultimately, by the time he was out of office the market was up 147%.  Now, we all know the reason those numbers are so high for Obama.  By the time Bush, number two left office the market had lost 26%.  So, he was at the very bottom of the m