Current Market Environment and Strategies

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We find ourselves living in a finance world right now where a single tweet can move the markets 800-1000 points. If you try to time this type of market, you will likely find yourself going mad given all the volatility. So, what’s the best plan to employ in this type of market uncertainty? Actually, it’s the same strategy you should use in any market; implement a diversified plan, stick with the plan, rebalance periodically, dollar cost average and keep emotions out. There are four core principles to long term investing; diversification, allocation, dollar cost averaging and rebalancing. I will expand on the first two of these in this article and cover the other two in a later column.

Diversification: Having a properly diversified asset mix provides the for the possibility that you could outperform the overall market because not all asset classes move in a correlated way. You should be exposed to many areas of the market in order to take advantage of sectors that may be out of favor now but will be in favor later. For example, you should be exposed to large companies, small companies, growth stocks, value stocks, domestic and international companies. Plus, you should be exposed to equities and bonds. This year alone, intermediate term bonds have returned almost 9% year to date – which is historically a very good return for bonds that usually act as a hedge in a portfolio.

Allocation: Diversification is an important strategy, but how much to invest in each asset class is another. You don’t want to chase returns and change your allocation too often because you’ll want to give time for the plan you enact to work. But how you set up the initial percentage in each sector is important. You do need to consider your risk tolerance, age and timeframe to determine the proper mix with which you’re comfortable and which is appropriate. 

In the next article, I will expand on dollar cost averaging and rebalancing. You can always reach out to Flight Line Financial (flightlinefinancial.com) with any questions you may have about any of our articles and services.

SOURCEAero Crew News, November 2019
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Glenn Nevola
Current airline captain and also financial advisor specializing in providing financial assistance to fellow airline pilots in their pre and post retirement planning. Glenn Nevola has been an airline pilot since 1986 where his career started with People Express Airlines, which merged with Continental Airlines in 1987 and was then merged with United Airlines in 2010. He is currently based in Newark as a 737 captain. In addition to being a pilot, he operated the financial arm of a real estate firm that purchased, renovated, rented, marketed, bundled and sold to investors over a 12-year span. He was personally responsible for over 300 closing during that timeframe. More recently he was a former financial advisor with Morgan Stanley in NYC where he acquired his Series 7 and Series 66 licenses. He brought over to the firm a concept and business model that would assist retiring airline pilots with post - retirement wealth management. This was, in part, augmented by the fact the mandatory retirement age was recently changed from age 60 to age 65 for commercial airline pilots. When Morgan Stanley hired him, the oldest of these pilots were then approximately 63 years of age. His unique position of living in both worlds – flying and finance - provided him the ability to market to his niche in direct target marketing from one of their own. He also has skin in the game, as he is a pilot, who participates in the retirement plans on which he advises and as such is in similar models as many of his clients. As time went on at Morgan Stanley a decision was made, based on many factors such as compliance restrictions, inability to market and assist younger pilots with their desire for 401(k) management and general restrictions on building out the business model, to split off and create his own financial services firm, Flight Line Financial, LLC (FLF) – a registered investment advisor based in NJ. FLF is also licensed in NJ for insurance enabling the firm to provide annuity counseling. This created a win - win scenario for further growth by allowing FLF to focus on 2 distinct groups of pilots – younger pilots, less than age 59 ½ and older pilots over age 59 ½. For the younger group, FLF provides asset allocation strategies incorporating diversification, dollar cost averaging and rebalancing options to pilots for a flat annual fee. Also discussed with this group includes topics such as Roth vs. non-Roth, 529’s, max contribution limits, 415 (c) limits, spousal accounts and other general financial topics. For the older pilot group, FLF has affiliated with a leading wall street firm for post-retirement financial planning. Wealth management services provided include many aspects such as creation of post retirement financial distribution plan, trust and estate planning, diversification, allocation, hedged equities, bond structuring, long term care, etc. The firm FLF is affiliated with has been in the wealth management business since the 1970’s and manages over $2 billion in assets from individual investors. Glenn has the unique position of living in both worlds – flying and finance. He interacts with his target market every time he is at the airport or on a trip. In numerous businesses, owners pay substantially for leads in their specific target market, such as mailing lists, calling lists, email lists, etc. Additionally, servicing the younger pilots creates pipelines for future rollovers. Currently FLF manages approximately $250 million in assets across approximately 200 clients.

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