After more than 18 months of rising markets, we’ve started to see a decline, with large sell-offs and heightened volatility in recent days. Although this might feel unsettling, I want to encourage you that market pullbacks like this are a normal part of investing and a healthy market cycle. We cannot have times of growth without corresponding declines. I’d like to share with you some additional thoughts on what’s happening and my philosophy in times like these.
The Markets vs. the Economy
Even when markets seem volatile, it doesn’t mean the economy is in a bad place. In times of market volatility, it’s important to take a look at the underlying economy. This not only helps us understand why the markets could be acting a certain way, but also how to respond. Right now, there are many indicators that recent economic and profit growth may continue, including historically low interest rates and inflation. This doesn’t mean continued growth is a certainty, but it can help us feel more confident in the future.
Short-Term vs. Long-Term
When I create your investment strategy, I look at your long-term goals and your risk tolerance and put in place a strategy designed to work for you no matter the market conditions. My aim is to work toward your end goal, which is certain, rather than market performance, which is uncertain. It’s especially important to stick to our strategy when markets are volatile and emotions are high, as moving strategies in difficult times could compromise your goals.
However, if I believe changes are needed to keep you on your trajectory, there are shifts I can make, and I’ll let you know if updates become necessary. But in most cases, I believe it’s important to remain invested in our strategy for the long term and not make changes in response to short-term market movements.
Staying the Course
When it comes to money, all of us tend to want to follow the herd and sell off—it’s a natural reaction, but it may not be the best one. My job as a financial advisor is to look at your situation and the markets objectively and help guide you through challenging times like these. I value our relationship and am committed to helping you pursue your lifelong goals. I will continue to do my best to help you navigate these volatile times and make recommendations that I believe in your best interests.
Thank you for your partnership!