The stock market seems to be the only place where, when things go on sale, nobody wants to buy!!
It’s disheartening to go through the downside of a market cycle and it’s tempting to say, "I want to get out,” but now is the time to refocus on longer-term thinking. Like it or not, bear markets are a fact of life and part of the game for equity investors.
So what should you do? Remember your long-term plan and stick to the basics:
maintain appropriate asset allocation and diversify
Utilize dollar-cost averaging by investing systematically
remember the importance of portfolio rebalancing
above all stay the course…think in terms of time in the market, not timing the market
History shows us that it is normal for stock markets to rise and fall, sometimes sharply. In the short term, stocks have more volatile price movements than alternate investments like bonds. However, over the long term, equities usually provide greater returns and build more wealth for investors.
Consider your required rate of return, time horizon and your tolerance for risk. By using an appropriate balance between equities and fixed income products like bonds, (hence asset allocation), and by holding a variety of different stocks and not putting "all your eggs in one basket”, (hence diversification), periodic stock market setbacks become more tolerable. In fact, many long-term investors believe market downturns make for good investing opportunities.
Now is a good time to look at rebalancing one’s portfolio. Portfolio rebalancing reduces the proportion of over-weighted well-performing assets, such as bonds, and increases the holdings of the under-weighted poorer performing assets, like stocks. Systematic rebalancing in this way enables investors to buy low and sell high, and take advantage of any significant weakness in stock prices.
While no one can tell you where the market is headed tomorrow, we can ensure your portfolio is structured in the best way possible to achieve your goals.
If you have any questions or concerns about your portfolio, or if your investment objectives have changed, we encourage you to contact us.
Contact us to further discuss these and other Financial Planning options.
E-mail Werner Hohn or call 519-624-8939 toll free 800-265-6148