What happened in 2008 may be happening again.
So says Kendrick Wakeman, CEO of FinMason. And he's trying to help spare investors from the crushing losses that many suffered eight years ago.
"We went into 2008, a lot of people had too much equity in their portfolio – too short to retirement, too much equity in their portfolio," Wakeman said during a visit to ThinkAdvisor's office. "I think we've got the same situation now. I think we've got people who are close to retirement and have too much equity. What we want to avoid at all costs, really, is a situation like in 2008 where people carried too much equity too close to retirement."
Then in 2008, the market crashed, investors panicked and sold, and they "lost their path to retirement," as Wakeman said.
"That's the worst situation of all because showing up to your job every day knowing that you'll never be able to retire is like trying to run a marathon knowing you'll never be able to finish," he said.
There are a lot of reasons people end up with too many stocks, but Wakeman explained two popular reasons.
"As the market runs up, if you don't do anything, the value of your equities balloons and then you've got too much equity or more equity than you had before," he said. "Also there's … chasing performance. Where the markets are doing well, people think it's going to do well and they tend to invest more in the markets at that point, which is not a great behavior."
What needs to happen to make sure the devastation that came with the 2008 crash doesn't happen again?
