Is a drawdown around the corner? According to Gary Droz, the managing director of MainLine Private Wealth, his clients are “obsessed” with this question.
“Clients seem obsessed with ‘Is a downturn coming?’ Obsessed,” Droz said during a recent visit to ThinkAdvisor’s New York office.
Droz, who has worked in financial services for more than 30 years, helped form Mainline Private Wealth in 2011. The firm now has around $400 million assets under management and caters to the high net worth and ultra-high net worth.
(Related: New Strategy to Navigate Market Volitility, Sept. 21 webcast with Michael Finke)
As Droz wrote in a recent analysis, the market has been in a perpetual upswing for several months, which makes a drawdown likely in the near future.
And this is what he tells his clients.
“When a client says ‘don’t you think the market’s going to draw down?’ I say, ‘Of course it is! That’s what markets do,’” he said.
Drawdowns of approximately 5-10% are common in any market cycle, according to Droz, and often occur multiple times within the same calendar year.
Since 2009, the S&P 500 has had 24 drawdowns of more than 5%, MarketWatch reported.