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My Portfolio VS The Recent Market Downturn

The quick decline in the stock and bond market over the last few weeks has started to get the attention of many investors.  Are the recent declines in the stock and bond market normal?  The simple answer is yes.

For a long time we have been recovering from the 2008 crash. Even recently the market continued to rally, but inevitably, the market must come down at some point.   Unfortunately, no one has a crystal ball, and there’s no telling if the current market instability is a passing fad or a long-term trend.

The good news is, how you react to changes can have a dramatic impact on your individual results.   The key here is to not let short-term results impact your long-term decisions.  The sooner an investor realizes that they don’t have control over the market short-term, the quicker they can focus on what they can control – which is cost, cash flow, and risk.

Is my current portfolio on track?

If the objective is to produce a certain amount of income a year and that goal is being met, you shouldn’t worry too much about the day-to-day noise of the stock market.   Often times we hear investors say things like, “I lost 5%! If I keep losing like this I’ll soon be out of money!” While this is true, we urge you in times of panic to focus on your portfolio as a whole and then reassess your concern.

It’s not uncommon for one part of the portfolio to be doing well while the other part is doing poorly.   Your emotions could lead you to tamper with your overall goal and chase results by selling the “losers” and buying the “winners.”  This risky strategy can expose you to even more risk than you started with.

Is my current portfolio in line with my risk tolerance?

Good question. We have an answer.  We added a new service for clients old and new, called Riskalyze. This survey is designed to pinpoint and quantify your exact level of risk tolerance on a scale of 1 – 100. This “Risk Number” is incredibly useful and could used be the cornerstone of a portfolio realignment that better suits your personal risk tolerance.

Looks like I’m on track. Now what?

If you have recently reviewed your accounts and feel comfortable with the level of risk you are exposed to, turn off the news, read a book, play a board game with your family, hit the slopes, order a pizza, do something FUN.  If you haven’t reviewed your investment plan in awhile, and aren’t sure if your objectives are still on track,then schedule a review with a licensed investment professional right away.

This could be the most important decision you make this week.

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