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A time machine could save you from lots of regret: you could undo that perm, maybe skip out on the tide pod-eating challenge or even stop yourself from getting that questionable tattoo. (Hey, it was cool at the time, right?)
But a time machine would also change the name of investing – you could take all the knowledge you’ve gained over the years and go decades into the past to get the most bang for your buck.
We may not have time machines (yet), but we do have technology that can help you and your clients make investment decisions built on knowledge and historical performance – technology like Riskalyze.
What would happen if Riskalyze had been invented way back in the 1980s instead of in 2011? How would it have changed your advice or the outcomes of your clients’ portfolios? What if financial advisors had been able to quantitatively assess risk instead of using a 10-question checklist on a yellow legal pad like so many advisors were relegated to using throughout the decades?
That’s what we’ll explore in today’s blog.
Let’s jump back a few decades to see how Riskalyze might have given financial advisors an upper hand during some of the biggest market events in recent history.
The biggest stock market moment of the 80s has to be the aptly coined Black Monday. On October 19, 1987, markets across the world faced a sudden (and unexpected) decline, decreasing the value of currencies and incurring losses north of a trillion dollars.
It was a devastating day for investors all across the globe. The cause? An unhealthy combination of international investor activity, automatic computerized trades and a slow overall economy. While the market bounced back within a few years, the damage had been done to several investors who panic sold during the downturn.
What would have happened if Riskalyze was around back in the head-banging, disco-dancing days of the 80s? For one, it could have helped the advisors of the day reduce that investor panic.
Riskalyze gives your clients a more complete understanding of what risk means and how their unique portfolio lines up with their individual risk tolerance.
The steep market crash would still have come as a shock to most, but their own losses would’ve been within their range of expected risk. Less panic results in less panic selling, and less overall loss for investors across the board.
When you think of the 90s, you probably think of boy bands, the Macarena and endless denim. But the 90s were also a time of great technological inventions (hello, dial-up internet!) – even though a lot of the euphoria played a part in the ensuing dot-com bubble.
All the hype surrounding advancing tech got investors excited – so much so that stocks started soaring. In less than two years, many tech stocks had tripled in value.
But that bubble popping was inevitable, and it all came crashing down in 2000. In the years that followed, tech stocks lost more than $5 trillion.
How would that scene have played out if Riskalyze was around? Let’s walk it back.
Venture funds are high-risk, high-reward. While tech looked like a fantastic investment way back then, it probably wasn’t the best choice for conservative investors. After all, the internet – and the venture capital funding it – was still a big question mark.
Riskalyze would’ve given advisors the ability to more accurately pinpoint their clients’ risk tolerance and steer low-risk investors away from those high-risk investments.
The Great Recession officially lasted from December of 2007 to June of 2009, but there had been warning signs of economic downturn for years.
The federal government had been steadily raising rates, people were defaulting on loans, and eventually the housing market went caput. Home lenders and investment banks went belly-up, resulting in massive bailouts from the U.S. Department of Treasury.
Real estate has long been considered a safer investment than stocks or other venture investments – so many people were shocked to be priced out of their own homes.
Those that were in the midst of home shopping were left at a standstill – was the real estate game changing? Was now the time to get in on the market, or to sit tight and invest their money elsewhere?
These conversations are tough regardless of a recession – but the added pressure of the Great Recession had clients losing faith in their portfolios and their advisors.
The world was still a few years shy of meeting Riskalyze, but imagine if the risk analytics firm had already made its debut. How could it have changed those conversations and outcomes?
Riskalyze offers priceless analytics and research that could’ve helped advisors visually show their clients a plan of action. Those crisp deliverables are available in conjunction with unique risk profiles centered around the client’s specific situation and goals – offering a full picture of your value prop.
Another bonus? Riskalyze has automated trade monitoring – which would have given advisors more time to focus on their clients during the recession.
The market today is highly volatile. There’s record-high inflation, wars in Europe and crypto is all but crashing. Who knows what’s next on the chopping block?
While you can’t predict the future, you can still learn from past market events to better protect clients. The key is to invest according to their specific risk tolerance and goals.
Today, Riskalyze helps advisors invest fearlessly with clients, because it’s not about knowing what’s ahead – it’s about knowing the how, what, and why of your personal investments.
Ready to take your investment strategies to the next level? Click here to schedule a demo of Riskalyze today.
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