What can I say that I have said not said before? Today, February 12, 2016, as I write the market as represented by the S & P 500 currently sits around 1859, about 7 points below the previous recent correction low from August 25th… About 13%...give or take…down from the high point of the index around May 21st of 2015. We’re still very much in “correction” mode and I somewhat reluctantly tell you that for most of us who are disciplined, well diversified investors, some of the asset classes in our portfolios such as International Stocks, Emerging Markets and Small Cap Stocks have actually been in bear markets for a while now. I am not reluctant to tell you that these asset classes have also produced some of the greatest one year gains coming out of these “pull backs” versus other asset classes. We own them because they’ve historically been significant contributors to a good long term strategy.
I am also going to “risk” telling you that I am heartened by the fact that I have not heard from many of you, which I am hopeful is a result of conversations we’ve had in the past about all of this type of activity being a “normal” and “natural” part of long term investing. (If not, I am anxious to speak with you, because we need to talk!) I am hoping you remember that temporary setbacks are normal for the type of investment strategies that historically have produced the kind of risk adjusted returns that might give us a fighting chance of maintaining our lifestyle during retirement.
Now a number of you have heard from me… because the last thing I want is for anyone to think that I am not right in the middle of this “thing” with you and that a day doesn’t go by that I don’t think about the possibility that some of you might be a little uneasy. We’re on the job and here for you 24/7… and I mean that.
Some things to remember:
- We cannot predict what the markets will do and should never try.
- A “good” long term strategy is still a “good” long term strategy even during a bad market.
- Sticking with a well-thought-out, disciplined strategy is not “doing nothing.” It’s a decision to continue doing the right thing.
- A review of a good strategy vs goals and making minor adjustments (such as when we rebalance) is not a bad thing to do… As long we’re not doing so in the interest of market timing. Done the right way, it’s a disciplined, emotionless exercise and may result in using volatility to our advantage.
- If you are currently investing, KEEP INVESTING. If you have some extra cash, consider INVESTING it into your current strategy. Much of what you already “own” is “on sale” now. Fifteen years from now, it’s possible you’d look back and say, “Gee, I wish I’d invested more when the market was there…”
- I don’t know where this stops and starts back up, but I do know that if goes down further, a few more people will panic and the opportunities for those of us who have been “enlightened” will be even greater
*All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges or expenses. Past performance does not guarantee future results. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks.