We asked the 2017 Top Financial Professionals in Northern Virginia everything you need to know before investing in the stock market.
We asked the 2017 Top Financial Professionals in Northern Virginia everything you need to know before investing in the stock market. Here’s what they had to say:
“I look at successful investing as a process, never a one-time event. When I recommend a stock, it must fit into the overall architecture of a well-constructed portfolio. Sector diversification is important, as well as company-specific merit. The same holds true for mutual funds or indexed investing. Once a portfolio is constructed, it must be monitored and rebalanced on a regular basis to make sure the asset allocation remains true to the investor’s specific targets and objectives.
In stock selection, I look at dividend payout as well as a history of increase in dividend (along with earnings coverage). I like to be “paid to wait” for growth. Projected growth of earnings and current price to earnings ratios are also important. This is after reviewing for sector diversification and industry timeliness. Stocks should be monitored for changes to any of the above metrics.”
–Bradford R. Coyle, CRPC, Managing Director – Investment Officer, Coyle Financial Group
“People should focus on the technical analysis of the stock to figure out their best entry point.”
–Gregg S. Konopaske, Co-Founder and Private Wealth Advisor, KFA Private Wealth Group LLC
“The first thing is to forget about the stock and ask yourself, “When do I need this money?” As a rule of thumb, if you think you’re going to need this money in the next three years, forget about stocks. A lot of people treat stocks as a way to go to Vegas. Buying a stock is buying a company, so the way you should think about a stock is: Are you willing to take that investment and stick it in a safe deposit box for at least three years without looking at price?
As far as looking at a stock, I’d substitute the word stock for business. Is this a business that you feel comfortable investing in? Do they have an advantage over their competitors, consistent growth, earnings?
Quantitative characteristics are also important. For example, I’ve owned Amazon.com for 15 years. At the time I bought it, Amazon was valued at around 20 billion, Walmart at 300 billion. I asked myself, “Is it feasible to believe that Amazon can be as big as Walmart?” Fortunately I was correct.
Whenever anyone comes to me to invest, the first thing we do is outline their financial goals and work backwards; I want to retire, or I want to buy a house. Those goals dictate allocation: the longer the timeframe, the longer percentage of stocks in their portfolio. If someone is saving for a house in the next three to five years, I recommend a more balanced portfolio—bonds (Corporate bonds are guaranteed by companies but not by the government. They’re safer than stocks but still have some risk; if the interest rates go up, the value of the bonds go down) and cash (The money market is government-guaranteed and the safest thing you are going to get). If a goal is zero to three years, cash; three to seven years, a more balanced portfolio with stocks and bonds; over seven years, more equity.”
–Jeffrey Grinspoon, Partner, VWG Wealth Management
“If you have a long time horizon (five years or more), invest your money in equities, preferably in well-diversified mutual funds or ETFs, and ride out the ups and the inevitable downs in the market. It’s also important to invest with a plan or a roadmap to make sure that you are on the right track to meet your goals—for most that’s getting to retirement and making sure that you have sustainable income in retirement that will grow over time with inflation and that you won’t outlive. Without a plan, even the best investments may not get you to where you want to be.”
–Tristan Caudron, Managing Director of Investments, Caudron Megary Blackburn Wealth Management Group of Wells Fargo Advisors
“We want our clients to understand the long-term fundamentals of a company when building a portfolio of stocks. When a new investor is looking to purchase stock, we often start with asking them what consumer products [they] frequently use. We often recommend them buying companies of products they use so they see the value in owning that company.”
–Ryan C. Sprowls, Managing Director – Investment Officer, Sprowls & Key Wealth Management Group of Wells Fargo Advisors
“If someone wants to buy a stock, it’s important to look at it as a 10-year set-it-and-forget-it strategy. If you are looking to make some money with a hot stock, that’s speculation. If someone wants to get in on the FANG stocks (Facebook, Apple/ Amazon, Netflix, Google), for example, it’s important that they maintain a 10-plus-year discipline. The transition from growth to income is the tricky part since stocks still play an integral role for most retirees. That’s where a professional adviser can help. I would go so far to say that most people don’t need a financial adviser if they have a 10-plus-year time horizon, unless there are tax/estate planning issues or a sizable portfolio to contend with.”
–Brandon Mink, Managing Director, Mink Wealth Management