Broker Check

Wait for it...wait for it...

| April 11, 2017

Honestly, I pretty much stopped listening to the weather on the news.  The only part I really pay attention to is the five day forecast to give me some indication of what might happen...and I stress 'might' happen.  It is so hard for me to change my schedule for a particular day based upon something that might happen on that day.  What I do know is it will rain or there will be a snowstorm, just not sure exactly what day.  What most of us do is prepare ahead of time we may be ready the day that it comes.  We do this by having snow tires, rain gear, an emergency plan for our family, a backup plan, etc...  

Reminds me a lot of stock market bear predictors, they are going to be right....eventually.  Because historically the markets have always had corrections.  In fact, according to American Funds, since 1900 (through December of 2016) the markets 'correct' 10% on average of one time per year.  (see link  Unfortunately, nobody can accurately predict on a consistent basis when that might happen, how long it may last, and when the bottom of the market will be.  

I am not arguing that some people may get it right...eventually.  However, they may have been predicting it for the last 5 years in which they sat on the sidelines and missed some pretty good market returns.  Much like sitting cooped up inside with a winter jacket on waiting for a snowstorm, that ends up being a trace of snow. 

So what are we to do?  How do we get through the day when we open the front door to see a foot of snow?  How do we survive a thunderstorm on a day we were supposed to have a picnic?  In Minnesota, the land of four seasons and a wide range of temperatures, we use many things to help weather those storms.  We have indoor malls, winter jackets, sunscreen, insulated homes, furnaces, shorts, sweatshirts and mosquito repellent, just to name a few.  

As investors, what do we do when the markets go down, or up?  What should we do if the market falls when we are about to retire?  What do we do when we lose a loved one or have family health issues?  You may have to adjust your plan but being prepared by using tools at your disposal always helps.  Diversification, asset allocation, adjusting your portfolio according to your risk tolerance and time horizon, having adequate insurance to protect from loss and having a Will and Last Testament are just a few tools we should consider using.  

My job is to help prepare you and have conversations about the things we should be doing to help weather those storms life throws at us.  Unfortunately, we don't have a radar to help us predict what will happen, but we do have the ability to plan for what might happen.  We start the plan by discussing your goals and concerns and then we help implement the plan so we can help you be prepared.  So when you open the front door and it's snowing, you can put on your winter jacket, slip on your stocking cap and know that you have boots and shovel in trunk, just in case.      

Diversification/Asset Allocation does not ensure a profit or guarantee against loss.