The recent market volatility serves as another reminder of how markets can react, when fear and uncertainty strike.
I often wonder what people are feeling and thinking right before they act to sell investments, after a sizable decline in value. Do they realize or understand, when someone sells a stock at a certain price, there is someone else on the other side of the transaction, willing to buy your shares, at that specific price. We know that in such a transaction, someone is making a mistake, and it usually is the seller. Why would someone else be willing to buy?
We invest for long-term growth of our money to outpace future inflation. The price of admission to this game of growth is volatility. Asset prices react to events, news, or anticipation of economic impacts. We as investors need to keep our sights on winning the game. We might lose a few yards from time to time on bad plays we make, or we may get blindsided by other traders plays, but we must stick to the game plan and keep marching forward to have a chance of winning the long game.
The truth is, we need a game plan that will carry us through life. The real risk is living a long period of time and not have assets that keep up with inflation, thus not keeping up with rising distribution needs. We can’t change the market or the environment we find ourselves in, but we can invest in a diversified portfolio that is resilient to the total volatility of the stock market. We need to allow for upside participation that leads to goal attainment. For this we need a disciplined approach and staying true to the purpose over the long run. That does not mean turning a blind eye and not looking at your portfolio for 20 years, but rather working with a financial advisor to help you design a portfolio consistent with your risk tolerance, timeline and goals.
Work with your advisor to create a regular rebalancing schedule to monitor that your balance remains in line with your risk profile. Make intentional investment moves to construct a portfolio that takes market directions into account. Alternatively, when working with an advisor, we have solutions using professional money managers who rebalance and replace assets using vast resources and expertise to help you with the long game of out pacing inflation.
Reach out to your advisor today, or seek the services of a reputable professional to help you craft a financial and investment plan, so you can win the game!