Market Ups and Downs – how much risk should you take?
By: David Smyth, October 16, 2014
It seems the Ides of October are upon us, and since the last time I talked to you about market ups and downs, I have had many phone calls and in-person conversations that can be summed up as follows: you’re wondering if you need to come in more often so that we’ll take more action on your portfolio. When I inquire as to why people are asking this question, it’s because they’re concerned about the market.
The answer is, no, you don’t need to come in more often, and doing so won’t make us take more action on your portfolio. When you came on board with us as a client, we assessed and carefully calculated your risk tolerance. We do this with each and every one of our client families knowing that market ups and downs are inevitable. We ask, “Are you okay with falling 15 percent if the market falls 30, or is 10 percent too much?” We’ve actually spent more time talking about bad things that could happen to your portfolio than good things.
Every so often, a “testing event” occurs, and that’s what we’re experiencing now – the markets go down and you must determine whether or not you’re actually the type of investor you thought you were. If you’re feeling an extreme amount of stress, not sleeping at night, and you’re thinking you want to adjust your risk tolerance, give us a call and we’ll talk you through the ramifications – both good and bad – of that decision. Let us help you.
The media will always pitch the worst possible case, whether talking about Ebola, ISIS, or the stock market. They’re as worried about ratings and ad sales as you are about your portfolio. We’re not facing the zombie apocalypse – this too shall pass.
We always welcome your calls, comments and questions. Don’t internalize your fears – share them with us, your trusted financial team. That’s why we got into this business. We’ll help you address those worries and discuss how making a short-term move could affect your overall portfolio and long-term strategy. I’m not all-knowing, but I do know that, oftentimes, sitting on your hands and doing nothing is the hardest decision of all.