Originally titled, “Gut Check in Rocky Markets” but with a new twist the following excerpted edition from the archives of TGIF 2 Minutes is timely on (Not So) Fat Tuesday. Please keep in mind three new factors:
- The political divide currently in the US is adding to market tensions and even politicizing the Coronavirus,
- Primary Elections and Debates and the policy issues being brought forth are next-to-center stage in the media,
- A still very recent UP 29% equity market in 2019,
and there exist the makings of a potential market correction. A market correction is defined as a decline of 10% from a recent high; the US equity markets are down over 6% in two days and are nearing an official “market correction” in 2020.
Please see the following excerpt – and stay in touch with your financial adviser or please call me.
Have you asked yourself lately…
- “Is this the ‘Big Dip’ in the markets they have warned about?”
- “Should I be selling my stocks?”
- “Should I be selling my bonds?”
Here is a curtailed checklist (ask me for the entire #1-9) of why you can – and in most cases should – be able to stick to your current investment positioning, given you had a PLAN in the first place:
- Your cash level. Is your level of cash sufficient for your CURRENT (i.e. 1-3 months) bills?
- Do you still have your job or your pension? (i.e. your income)
- Do you have a Plan in place? (For help with what this means, please call me)
- How is your progress toward your short-term and long-term GOALS?
- Is your “asset allocation” still roughly intact (i.e. your long-term “set” proportion of Stocks vs. Bonds vs. Cash)?
- When is the last time you heard from your Financial Adviser?
- Are you scared? If YES (which is perfectly reasonable) what are you scared of?
If you can answer YES to most or all of these questions, then there is little to no reason to sell any of your investments in a rocky or down market.
If you find that you are scared, identify what it is that you are scared of:
- Is it “losing everything”?? With history as a guide, the “losing everything” scenario is extremely, extremely unlikely – unless you have an outsize % of your monies invested in a very narrow list of securities or you have most of your monies tied up in a business (i.e. you are not diversified).
- Are you scared of not being able to achieve retirement? Then this is more a matter of how much you SPEND vs. how much your stock or bond portfolio has gone down.
- Is it fear that you will run out of cash?
- To that end, do you have a “peace of mind” amount of cash on hand today? Yes, “Cash is King” for that peace-of-mind feeling. Although holding too much cash can hold you back from keeping up with inflation over the longer-term. Talk with your financial adviser about an intelligent amount of cash to have on hand.
Even though it is Tuesday… Thank you for reading and stay in touch.