Today's wild ride in the market and our current world news is getting a bit nauseating! Where are the good old days of "plow horse economy", and "new normal" where our daily markets hardly ever made the evening news. Is this craziness yet another side-effect of our current unorthodox President Trump? Maybe the Russians or consequences from quantitative easing?
It's tough enough to a stay with a long-term investment plan when the talk of the day is a storm called Daniels, missile launches, Facebook data auctioning, and trade-wars. Now add in swings in the market of more than 2% (hundreds of points) almost daily in the markets and some folks begin to panic. So, what should one do?
- Resist the urge to sell based solely on recent market movements.
- Volatility is more normal in the markets than what we have been lulled to expect over the last few years. Maybe this should be called, "the new-old normal".
- Take the long view => remembering that bear markets occur every four to six years, yet long term market results should overcome short term ones.
- Review your Risk Score (tolerance) and rebalance if needed.
- Risk tolerance is something unique to every individual. Heightened volatility, is a great reminder of our feelings (tolerance) to taking risk. Its easy to consider oneself a risk-taker when returns are double-digit positive...yet something entirely different when its negative.
Now is a GREAT time to re-look at your risk: both in terms of your assessed tolerance, but also a score on your portfolio. There are several do-it yourself ways to assess this or visit with your financial professional. Then rebalance your portfolio to get these two things aligned.
Volatility: aka Market Turbulence: When the captain comes on the speaker, and requests all to fasten their seat-belts, most folks comply. You don't see many pull out their seat cushions, run to the exit door, and request to jump! That's not a good time to get off. Yet, it is a good time to re-think of your preferred mode of travel for the future.
What's your Score?
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