Even in good economic times we see market volatility and recently the market has shown a little more volatility and given some people stress about their holdings.
This often can be unsettling, and even when investors have a portfolio where the implementation and asset allocation is backed by Nobel prize winning academic principles, investors can get nervous about their portfolio and their holdings.
Investing should be viewed with the future goal in mind and having a clear understanding of how the principles of your portfolio works will help you be more at ease during turbulent markets. But when every person around (including the media) is acting as if the world is coming to an end it can be difficult but even more important to keep a few things in mind.
· Volatility is a normal part of investing. We can all be disappointed in downturns, but we should never be surprised by them. As along-term investor reacting to downturns will often be more damaging to the portfolio performance than the draw down itself.
· Try not to forget the vision of your overall longer-term goals,and always keep in mind that uncertainty is what creates the opportunity for growth. Stocks have higher expected returns than most other investments because of the additional risk and volatility that comes along with it. If there was no uncertainty, then investors would not be paid with historical great returns.
· The financial industry is often geared towards making people believe that they can avoid uncertainty. But we should all know that the future is unknowable. Therefore, the investment market is also unknowable going forward. We believe that the best approach is to make informed decisions and keep your money in a portfolio that is built around sound academic principles based on facts and knowledge and not on hope and irrational predictions about the future.
If you need to go over your portfolio, please reach out to us and schedule a meeting.
If you would like to get a complimentary full financial written plan, please reach out to us.