It is my intention to personally reach out to every single one of you and to re-assure you that everything is going to be OK. In the interest of time, I am sharing my thoughts below and my staff and I are here to answer ANY questions you might have. Please reach out!
In today's day and age there is an instantaneous spread of information. The news is positive and negative, accurate and not so accurate, and lately, Breaking news after Breaking news, and then more Breaking news.….it is hard not to panic. So here are a few things I want to share with you.
I have been fortunate to enjoy my career in financial planning for over 25 years and many of you have been working with me for that long. I would be lying if I said that the latest market decline is not a big deal or that it doesn’t feel uncomfortable. Just the same as previous declines… it does! But here is what I’ve learned from these experiences, and it is still stands today:
It’s ok if you feel nervous.
The last several trading weeks have been extremely volatile, and we’ve watched acute declines in the stock market and fixed income investments. The continuous war in Ukraine, rising inflation, high oil prices, and swift increase in rates all create an enormous amount of uncertainty. It's natural to feel a bit unsettled.
I’m human too.
I too have money invested with long term goals in mind, and money I need in the short term. Even though I know I won’t be using most of my investments for several years, it doesn’t feel good watching my balances fluctuate in this manner. Despite it, I will stick with my plan. . I understand what it’s like to know something objectively but to still have emotions that don’t align.
You may feel like you need to DO SOMETHING.
When we feel like things are out of our control, there is a natural inclination to feel like you need to act- sell something or buy something! People ask me, “What are we doing about this?”. Please let me remind you that sticking with your target allocation and carefully designed plan, i.e., doing nothing, is actually doing SOMETHING
Panic is not a plan.
We spent a considerable amount of time putting together your financial plan. We talked about long-term goals, short-terms goals, the amount of risk you can stomach, potential market ups and downs and long-term performance etc. If you are feeling nervous, I’d like you to consider the following:
- Have your goals or values changed? We designed your investment portfolio and financial plan around your specifically stated goals and values.
- Has the amount of money you need monthly, or time horizon for needing your money, or beneficiary needs, or anything else material changed?
- If we sell now (i.e., “go to cash until things settle down”), when will you want to re-enter the market and what does the economy and stock market look like at that time?
Here’s the thing- I know you objectively know this! Historically, the best days in the stock market follow some of the worst. You may be thinking, “I just don’t want to ride this down anymore”, and I understand that feeling. I don’t know anyone who rode out the bear market of 2007-2009 and said, “I really wish I had sold out and not recovered”. This matters because if you choose to sell now and do avoid a further decline, you will have locked in a loss and will have to figure out when and how to re-enter. I would argue that THAT is the bigger challenge.
Or in most recent memory, on February 20th, 2020, stock markets across the world suddenly crashed after growing instability due to the COVID-19 pandemic. It ended on April 7th 2020!! Who could have predicted this kind of a swift recovery?
