Communication Is Key

One of the biggest misconceptions in financial planning is that hiring an advisor means you can completely “set it and forget it.” While a good advisor should absolutely guide the process, successful financial planning is a partnership — and the clients who tend to have the best outcomes are usually the most proactive and communicative.

Financial planning is not a one-time event. It is a living, breathing process that changes as your life changes.

A raise at work, a job loss, a new business opportunity, an inheritance, a divorce, a home purchase, retirement plans shifting, helping children financially, health concerns, or even changing personal goals can dramatically impact your financial future. If your advisor doesn’t know what is happening in your life, they cannot properly plan around it.

Too many people only communicate with their advisor during annual review meetings. Meanwhile, major life events happen in between those meetings that should have triggered planning conversations months earlier.

The best financial relationships involve constant communication.

If you are considering changing jobs, your advisor may help evaluate compensation packages, retirement benefits, stock options, or tax implications.

If you are thinking about buying a home, they can help determine how it affects liquidity, long-term cash flow, and retirement savings.

If your income increases significantly, proactive tax planning could save you thousands of dollars before the year ends instead of reacting after tax season arrives.

Proactive planning creates opportunities. Reactive planning often creates damage control.

This is especially important during volatile economic or market environments. Investors who disappear during uncertainty often make emotional decisions alone. Investors who communicate with their advisor tend to make more rational, long-term decisions because they are talking through the situation rather than reacting emotionally to headlines.

Communication also helps advisors better understand what truly matters to clients.

Financial planning is not just about maximizing returns on a spreadsheet. It is about aligning money with goals, priorities, values, and lifestyle. Sometimes the “best” financial decision mathematically is not the best life decision emotionally or personally.

An advisor can only help balance those tradeoffs if there is honest communication.

At Lloyd Financial Group, we often tell clients that the more we know, the more we can help. Financial planning works best when there is transparency, trust, and ongoing dialogue.

The clients who stay engaged in the process typically make better long-term decisions because they are planning ahead instead of constantly reacting to life after the fact.

Good financial planning is not about predicting the future perfectly. It is about preparing for it proactively.

And preparation always starts with communication.

Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

Colin Symons, CIO Lloyd Financial Group

Semiconductors (SMH) have become wildly popular, up 60% YTD. Ultimately, I’d just call that reflexivity in motion. AI is the growth sector, and semiconductors are the picks and shovels of that AI movement. Since we’re still heavily building out AI, SMH is growing sharply. Semiconductors have been the safe purchase if you want to buy growth.

Of course, after going up so much and so fast, it’s reasonable for people to ask when the upside ends and the crash begins. I’d say you need to segregate that into two different ideas-- when’s the pullback and when is the top?

I think betting on a pullback is relatively easier. If you look at something like Relative Strength (RSI,) we’ve really been deviating from recent pricing. The idea of SMH taking a break seems quite possible. One broad thought is that once RSI looks to have peaked out or maybe is no longer overbought, you can sell or short. Or when momentum slows.

However, I’d view that as a temporary short unless news changes. Demand for semiconductors still seem insatiable. Yes, the expectations implicit in semiconductor stock prices reflect at least some of that but in theory this demand can last for years. I’d feel better about selling or shorting semiconductors once they stop responding so positively to news.

So, while the upside in semiconductors has been remarkable, that’s because the fundamentals have also been remarkable. While I could see a pullback, I’d be reluctant to call a top. For our part, we did slightly trim our semiconductor holding last week, in part because some of the individual names had become such a big portion of the portfolio and we weren’t comfortable with the potential loss.

We’re also not adding to semiconductor holdings up here, though. I don’t really think they’ve topped but I do think there are better places to be. I keep banging the drum on software (IGV,) for example, as earnings still seem strong and they’ve been pretty de-risked by the decline. I also think as wars seem to be winding down, that should help the dollar to fade, which should help international stocks gain a bid, again.

In terms of catalysts, I think there’s been a lot of fear of late, which in my mind is part of why the rally has been so narrow. To the extent investors have been willing to take risk, they’ve focused (perhaps overmuch,) on semiconductors. I’d say the fear stems from the concern inflation will cause trouble, which in turn is due to soaring oil prices. Fix oil concerns and investors may find it easier to relax.

Thus, I think an end to the Iran war can help broaden the market rally. In theory, this could take the shape of semiconductors and megacap tech taking a break while the rest of the market catches up. The line above is equal-weighted SPY versus SPY, and I wonder if it’s getting close to a time for that to head up again.

Bottom-line, semiconductors have certainly moved quite a bit in a short period of time. They may be due for a rest but there’s nothing obvious saying they’re peaking. It does seem reasonable to think we may be ready for different leadership at least for a time, though. Perhaps a more relaxed investor will be more willing to invest in a broader array of stocks when and if war concerns abate. As always, we’ll see what happens.

Existing Home sales were a modest disappointment, at 4.02MM vs. exp. 4.05MM.

Political turmoil in the UK is hitting their bonds and spreading into the world a bit as Labour party leadership falls apart following big losses in local elections.

Oil broke over $100 as talks seem at a stalemate and despite a Petroleum Reserve release.

Korea’s presidential policy chief said profits from AI should be shared with all citizens, sending memory stocks lower.

ADP Employment and CPI today, where concerns about elevated CPI are high.

Bottom line: Oil is popping up again while investors worry about CPI.

Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

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Past performance is no guarantee of future returns.

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