Ummm, yes, I know it’s a double whammy, none of us had the billion‐dollar ticket and now the stock market, in correction territory, is “going to Hell in a hand basket”! So what’s a person to do? Hopefully, you have already developed an investment strategy that is built around your risk tolerance and financial goals. In the midst of a volatile market is not the time to start since your objectivity may be at question. Your strategy should clearly envision your goals, your commitment to savings, your understanding of the varieties of risk and your ability to remain focused on your objectives in the midst of adversity.
There is plenty to do even if your investment strategies are sound. Volatile markets may be a time for a more active style of management. When broad markets are falling, owning indices of market capitalization weighted stocks may lag a more tactical approach to investing. It may seem counter‐intuitive to be selling when the market is low but opportunities arise to own positions that may be a better fit for your financial objectives and therefore “selling low to buy low” may be a solid strategy. In our practice, we are seeking opportunity and approach our considerations analytically and objectively, constantly second‐guessing ourselves to obtain a more “purified” asset allocation and investment strategy for our clients.
While it would be ideal to time the market, I don’t know of anyone who is truly prescient to predict market highs and lows although many make the claim that they do. We allocate assets in accordance with our clients’ objectives and tolerance for risk. Risk management is a constant in how we create portfolios. By incorporating asset classes that offer resistance to market declines, even as mundane as cash, then that level of predictability gives us and our clients a better understanding of their portfolio risk. In markets such as these, we are seeking buying opportunities, considering if current allocations and investments are “holding water” and seeking to understand the nuances and signals that will assist us in better positioning our clients. Remember “you have to play to win” whether it be the lottery or investment opportunities.