What Is Your Number?

There continues to be predictions about market direction. Particularly if certain events occur. There are those that predict a market ‘crash’. And those that predict that it will continue it’s up move.

Well both are right. At some point the markets will do down. The problem is no one can tell you with any degree of consistency when.

Businessman presenting financial analysis with charts generated by big data displaying international success and dollar signs
Businessman presenting financial analysis with charts generated by big data displaying international success and dollar signs

The Wall Street bullies find new and very inventive ways to keep people trading. These bullies have convinced everyone that gambling and speculating are investing. They can make their pleas to trade very convincing.

But not you. I am so proud of you. You have not lost sight of your long-term goals and time horizons. Investing is hard in times like this. We are investors, not speculators or gamblers.

Remember gambling and speculating with your investment dollars only benefits the bullies and not you.

Short-term volatility is to be expected, and doesn’t mean that the risk part of your portfolio isn’t working. While it goes against all of our human instincts, this is the time to remain disciplined and rebalance.

Each one of my clients has different levels of risk or volatility in their portfolio, from very low risk, to balanced or moderate risk, to aggressive. And somewhere in between. Customized to your goals and desires.

It is very important that you are in a portfolio according to the level of risk you can sustain for your lifetime (or a strategy that slowly reduces risk over time), which will allow you to remain disciplined and ride through the upside and downside volatility, while allowing us to rebalance your portfolio on highs and lows.

Know your risk measurements.

If you know your risk measurements you will know what to expect, and won’t be caught off guard when downside volatility occurs. Greater peace of mind comes from knowing your risk and knowing what to expect in down periods and up periods.

The longer term average returns include both upside and downside volatility. Upside and downside volatility can be reduced but not eliminated in the risk part of the portfolio. Investors that tend to take too much risk, or worse, take too much risk and don’t know how much risk they are taking, tend to panic and lose large sums of money with market timing issues.

IF markets go down (as they always do from time to time), you/we have a plan. We will rebalance the portfolios. Because of the diversification in the portfolios, we have the bonds to rebalance into stocks when stocks are down.

To succeed we must own equities….globally diversify…..rebalance.

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