It’s 3 o’clock in the morning and I’m worried. Last week, the markets were down hard, with the S&P 500 going from positive double digit territory at the end of the quarter to down just under break-even only 26 days later. Here’s what the week looked like:
- The S&P lost 4.18%
- Russell 1000 lost 4.05%
- Russell 2000 lost 3.8%
- Russell 3000 lost 3.96%
- MSCI ex US (International Developed) lost 3.9%
- Emerging Market Index lost 3.6%
But that’s not why I’m worried. I’m worried because in weeks like this, we are in danger of losing perspective.
Sometimes we look at a week like this and wonder “What am I doing? This is crazy, I can’t continue to lose money like this. I need to do something!”
But the truth is you don’t need to do anything because you already did. You hired me.
Unless you are all in, 100% equity (or have concentrated positions), your losses from last week, although not chump change by any stretch, are not nearly as severe as the roughly 4% loss borne by the market. Check my math from your Blueleaf report, or just email me and I’ll do it for you.
Your portfolio is already designed to withstand downturns so we can mitigate their impact on your long term success, and it’s working.
Remember what I always say: “We don’t invest because it’s fun rather we invest because we have to.”
If we were investing for fun, we would find a few technology stocks with cute, made up words for names and ride them up and down like an all-night binge at the Blackjack table in Vegas.
But that’s not what we’re doing. We’re investing serious money for real return to achieve critical financial goals. Market risk is the MVP in our efforts where we fashion carefully crafted portfolio strategies to achieve the best return we can for the least amount of risk. We do this by mitigating other risks that don’t provide enough risk premium and by dampening market volatility to acceptable levels. It’s a long term play designed to provide long term success.
If we lose perspective we could lose everything. For nearly all of us, if we don’t make a real return over inflation, our financial goals are in danger of failing. Therefore; the best way for us to fail is to reject market risk, and invest “safely” at or below the inflation rate.
I used the pronoun “we” a lot in this post as a reminder that we’re all in the same boat. It’s not uncommon at all for advisors to lose their nerve during downturns, and make impulsive market timing decisions as “safety” measures that put their clients in dire risk. We’re all human, but consider this post as an assurance that I’m not going to do that. Your financial success is too important to me.
Questions or concerns? Email me at email@example.com or call me at (817) 405-4014.