How investors can outsmart the current market!
Inevitably downward market volatility causes stress, anxiety and in some cases panic. My message today for investors is not to lose sight of your long-term goals and time horizon. Short-term volatility is to be expected, and doesn’t mean that your portfolio isn’t working. While it goes against all of our human instincts, this is the time to remain disciplined and rebalance. For those of you feeling distressed, confused, or anxious, you can call me, your coach, and get your questions answered. Your long-term peace of mind is on the line.
The market correction is completely different than it was in 2008. Back then; the market correction was based on economic disasters (banks, insurance companies, Fannie Mae/Freddie Mac, auto industry, housing bubble, etc.)
Today it is more about fiscal policy. While our economy may not be the greatest, it does show signs of continued improvement. What does not seem to be improving is spending by our government. We are now about $16 Trillion in debt. Our debt to GDP is getting out of hand. One needs to look no further than Greece, Spain, Italy, Portugal, and the EU. The lesson is clear; we must stop, or at least, control spending.
Our Country has now been downgraded by S&P to a AA+, and hopefully it is a wakeup call for our government to get in line, make the necessary cuts in spending, and make this Country prosperous once again.
Once this news settles down, the market will go back to moving on company earnings-, which is the engine that drives stock prices. So in the meantime, here is what we’re going to do:
Buy, Hold, and rebalance!
We are not going to ignore the rules of investing. We will buy stocks, be diversified, and rebalance quarterly as needed. Warren Buffet said it best- “Be greedy when others are fearful, be fearful when others are greedy.”
We are going to be greedy, and reap the rewards when the market is back on the upswing!