By Jay Sanford, Director, Investment Strategy
The last time we met, we discussed the inevitability of the stock market going down and what we look at when it comes to taking the temperature of the market. (Remember, that is our little secret!)
The second question to that blog post was, “What should I do about it?”
Not to sound all glib and all, but the answer is: “Nothing!”
It is imperative you have a close, communicative relationship with your advisor, whomever that may be. So when you come to these inflection points in the markets, which are impossible to time, you know that you are already in the proper portfolio for the goals you are pursuing. Communication is key here, as the advisor needs to know the time frame in which you need to utilize the money you have invested. If it is a short term goal, then you must be conservative. What is short term? 2-5 years is short term in my world (short term might be longer term in your world, so communication is key). Any funds you need in less than two years, it should be cash or a cash equivalent. Longer term funds (5+ years) can have more risk to them, knowing that although they may go down with the market, they will surely go back up when the market turns positive again.
Ask questions when it comes to risk and how the investments you own act in certain market conditions. Although we can’t predict exactly how every investment is going to react to market conditions, we have historical data that can at least give us a data set to study.
Bottom line: talk to your advisor about your goals and the time in which you have to achieve them. From there, develop the allocation (risk) that matches up with the time horizon and check in periodically to make sure things are acting or reacting the way we think they should along the way.
The inevitable happens, by definition. Be prepared to do nothing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Global Retirement Partners, LLC (GRP) a registered investment advisor. GRP, LPL Financial, and Washington Financial Group are separate non-affiliated entities. 1-718450