It’s been quite a ride since the March 2009 valley in stocks. Most people who stayed in the market have cheered the new highs but many are concerned that another dip can happen again. So what do we do?
We have our opinion but we are not all-seeing so we can’t tell anyone with certainty whether stocks have room to run or are in for a major correction. We do know that there will be both Bull and Bear market turns; we just don’t know when.
That’s the reason we have constructed the defensive, diversified portfolios we have been managing. We have always believed that calling market turns is not possible on a consistent basis. Even those who claim to have called the drop of 2008 missed the timing, often by years, and those same “experts” were not the ones who told everyone to get back in at the right time.
We have created portfolios that are designed to hold up over the long-term. As long as we have set a prudent course of action, short-term market moves are not relevant to achieving long-term goals. In fact, market turbulence offers a chance to review plans and revisit asset allocations to make sure that long-term goals are being met.
The importance of keeping emotions out of financial decisions is best underlined by a study by Fidelity Investments that showed that 401(k) savers who continued to make contributions and stuck with their asset allocation during the financial crisis saw their account balances grow by 50% from September 2008 through June 2011. Savers who fled from equities had growth of just 2%.
If you want more of our take on recent market events, give us a call. We’ll be happy to talk with you.