A day like today is why I do what I do. A day like today is why we have conversations about risk tolerance. A day like today is why I ask how much money my clients might need in the next couple of years to live on and we diversify those funds so they shouldn't fluctuate as much as the general markets. Quite honestly, days like today are why people work with a financial planner to begin with. Since I can't call everyone at one time, I want to share what is going through my head on a day like today and help answer some questions that we are getting today.
First of all, anyone who tells you they know exactly what is going to happen in the markets is not being truthful. The market is behaving irrationally and there is no predicting irrational behavior. What I do know is there are some pretty good economic indicators, there are still businesses hiring, housing starts have been strong, retail sales are up from a year ago.1 Among other things. I also know that we've had a conversation about your risk and we've planned for things like this to happen because they are so difficult to time.
What I don't know is how the coronavirus will impact these economic things, if the economy will fall in to recession, how the markets will react (more specifically, if they'll continue to go down or not), who will be elected president or even what I am having for supper tonight.
Having been in the business since 2001, I can remember market events and the emotions we all feel. Unfortunately, I don't keep a diary but I have been keeping a blog since 2016. So two recent downturns we've seen I have written a blog about and you can read those by clicking the link(s) below:
2016 Brexit - When Irrational Thoughts Take Over
2018 - Ouch that Hurts
I also glean information from investors that have been doing this for much longer than this who are much smarter than I am.
Warren Buffett, in-particular, has a famous quote, 'Be fearful when others are greedy and greedy when others are fearful'. Here is a link to a recent article from Market Insider February 28, 2020
So what should we be thinking about:
1) If you're concerned about having money invested that you'll need for income or goals in the next 3-5 years please call me. It's likely we've addressed that goal and concern but a conversation might help refresh those conversations.
2) When you see the market going down (or up) understand that your portfolio is diversified and does not necessarily move exactly down (or up) as much as the markets.
3) If part of our plan is converting IRA funds to Roth IRA, now might be a good time to do that.
4) Consider making your IRA or Roth IRA contributions.
Money is emotional. Take a breath, go for a walk, enjoy some time with family, go watch a ballgame or do something other than stare at the news.
The short answer is I don't know, but I am here to help. As always, please call with questions. Many times a quick phone conversation can answer some questions you have and help ease some anxiety. If nothing else we can catch up on your life and how things are going for you.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results.