|Hang in there! Coronavirus is serious and will impact the health and well-being of thousands of people across nations and continents. Until It’s contained, estimating the economic consequences will be difficult. While the outbreak and severity are hard to predict the markets are always subject to unforeseen and disruptive events. That’s why one of the most important discussions we have is about risk. |
If you are receiving this message you should be well within the customized risk profile we have created for you. Unless you have had a recent unexpected life change since the last time we discussed your accounts you should stay the long-term course we have set and adjusted over the years.
Why you should not make a change to your portfolio at this time:
1. Very rarely in 20 years as a Financial Planner have I known a client to both get out of the markets at the right time and then enter back into the markets at the right time. To beat the markets you need to BOTH sell high AND buy back low.
2. The vast majority of my clients who have exited the market during a correction did not choose a good time to get back into the market and as a consequence were worse off than if they had stayed in the markets. Few of my clients who have exited during a correction chose a good time to exit (already the markets are down more than 10%).
Why you should change your portfolio during a correction:
1. You are experiencing a major unexpected life change that will cause you to access to your investments much sooner than expected. Your situation has changed dramatically and unexpectedly.
2. You seriously misjudged your ability to live with serious market fluctuations and expect to permanently reduce your risk tolerance and you are willing to accept the lower long term returns these changes will cause.
3. You see the correction as a buying opportunity and view it as a chance to buy low and later sell high.
4. You have reason to believe you can outperform the markets due to your demonstrated expertise in timing the markets.
Remember, very few of you are invested 100% in the stock market so your losses are relative.
– Conservative investors are not down very much at this point.
– Moderate investors experience roughly half the market decline.
– Aggressive investors are experiencing most of the market decline.
No matter what you decide to do going forward, please know that we are grateful for the trust you place in us. Please see the article below written by one of our trusted investment companies.
Click HERE to download a commentary from SEI Investments Company.