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February 29, 2016
Your Financial Concierge
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Dear <<Your Name>>,
Were you keeping an anxious eye on your investment accounts through February's crazy volatility? Are you relieved they seem to be climbing again?
In spite of February’s dips, much of the market has now climbed back up to where it was at the end of January. That means that if you had looked at your portfolio on January 31st and didn't look again until today, you would see substantially no change.
That’s important to note for several reasons.
The short-term nature of much of the volatility that characterizes the markets is exactly why Dollar-Cost Averaging is such a smart way to invest. If you stick to a plan of investing in new shares on a regular basis - no matter what the current cost is - you will be buying during dips as well as peaks.
The volatility we’re experiencing now – as well as the speculation about the upcoming elections, questions about possible negative interest rates, and concerns about international instability (like negative interest rates in Japan) - are also great litmus tests to determine whether you have a properly diversified portfolio and whether or not it’s an accurate match for your risk tolerance.
If you know your true risk tolerance and have already planned effectively, you’ll have a balanced portfolio that contains the right balance of stocks and other less volatile instruments before volatility sets in. With a fully diversified asset allocation strategy, there will be parts of your portfolio that go up, as well as other parts that go down, during times of stress. That way you’ll be comfortable sticking to your investment strategy and plan through peaks and dips. Not only that, but you will have purchased those less volatile instruments before pundits start shouting and everyone starts panic-purchasing, driving the costs up.
Volatility is what makes the stock market the stock market.
The one thing that is certain about the markets is that there will always be volatility and uncertainty.
Even if we are currently experiencing a bit more than just normal market volatility, remember that the markets have historically rebounded extremely well after corrections (drops of at least 10%).
If current market conditions or any paper losses you may be experiencing are making you feel uncomfortable – or keeping you up at night – please give me a call and let’s talk about re-allocating your assets.
If not, just remember that dollar cost averaging is a great long term strategy for your investments.
Best,
Brad Sherman
Sherman Wealth Management
Your Financial Concierge
Office 240-428-1622
Cell 240-462-5273
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Sherman Wealth Management is a Registered Investment Advisor. Please see our website for full disclosures. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital.
The views expressed in this content are as of the date indicated, and are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
Sherman Wealth is a Registered Investment Advisor ("RIA"), located in the State of Maryland. Sherman Wealth provides asset management and related services for clients nationally. Sherman Wealth will maintain all applicable registration and licenses as required by the various states in which Sherman Wealth conducts business, as applicable. Sherman Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion.
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