Four years ago our family suffered our own 9/11 disaster when the Santa Clara dam burst and four feet of mud and water crashed through the back doors of our living room. Up until then most of us didn’t even know Santa Clara had a dam and its neglect was evidence city officials didn’t pay it much attention either. Built over 100 years ago to protect the lower farmlands from summer storms, the dam sat quietly for many years until on that fateful day it filled to near the top as floodwaters from Ivins flowed towards the river. Failing to do the job it was designed to do, the dam failed and, in a sad irony, created a bigger flood than had it never been built in the first place.
The rushing floodwaters, following the path of least resistance, weaved through neighborhoods, selecting certain houses for destruction, while others right next door were largely unaffected.
Our home was on a cul-de-sac with three other homes. In a few minutes there was nearly four feet of mud and water filling the main floor and burying the yard, yet two of our immediate neighbors were untouched. The water entered the home through the back door, then quickly retreated out the way it had come in and crossed a farmer’s field into the river. Had a pair of french doors in our family room held, the entire inside of the home may have been spared. As it was, it took over a year and $200,000 from our savings to repair the damage. The randomness of it all still baffles me.
I was thinking about the risks of random events as I reviewed market activity this week. On one particular day I noticed that though the market indexes were up, over half of all stocks were down. In fact, since the election, most people feel the stock markets have done very well, which they generally have, but the rally has been somewhat selective as many stocks are actually struggling. The old Wall Street saying that a rising market lifts all ships has not been very reliable this time around.
All this has been a reminder of another of many risks investors face with the sometimes randomness of the markets, perhaps especially when they chose to invest in individual stocks. Like the Santa Clara flood, a flood of market movement may strike one company while completely missing another. This unique time in the stock market may appear happy on its face, but your personal happiness will be dependent upon which investments you happen to own.
Each new administration brings its own opportunities and challenges for investors and even though many, including myself, are optimistic about having a pro-business president, investors can never assume that a rising market, if it continues, would be positive for everyone. Markets can be unpredictable and random, and rising markets may actually increase risk if investors become complacent. Remember that stock markets, like floods, can be very selective.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 1173 S. 250 W. Suite 505, St. George, UT 84770.
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