Monthly Archives: September 2015

It’s the End of the World As We Know It (And I Feel Fine?!)

Sunset Behind Manhattan

If the past few weeks have been any indication of what’s to come, investors would be well advised to buckle in for a bumpy ride.  Europe has been having off and on problems for years, China’s economy seems to be slowing, and all eyes are on the USofA and the Federal Reserve.  Do they raise rates or keep them at zero?  The S&P last bottomed in March of 2009 — that’s over 6 years ago.  How long before we see another downturn where the Federal Reserves dearly wishes they could cut rates again?  It’s an interesting landscape to say the least.

At times like these, it’s good to take a step back and think big picture with regards to your portfolio.  When exactly do you need the money that you have in the market?  Is it soon, or a long time from now?  If it’s going to be awhile, a little blip like this isn’t going to make a difference.  In fact, it might be a good idea to average into more stock positions if you find yourself under invested at the present.

Remember back to March 2009 when the S&P had that meltdown.  How many investors got out of the market?  How have they done since then?  It would be tough to outperform the S&P from that point on.  Generally speaking, buy and hold investors do better than very active ones.  In fact, Vanguard Research recently reported that “a buy-and-hold approach outperformed a performance-chasing strategy by 2.8% per year on average during the 10-year period analyzed.”  So keep calm.

If you feel like your holdings are too volatile, it might be a good time to visit your diversification planning.  What percentage in stocks are you?  How about bonds, real estate, foreign stocks, etc?  It never hurts to take a step back and look at what volatility your portfolio has been realizing, and try to figure out if that’s an appropriate level or if you would be better served with more (or less) diversification.