Recent Market Volatility: What Do We Do?
January has come to a close, Punxsutawney Phil saw his shadow (6 more weeks of winter…ugh!), we have more snow coming to the Northeast later this week, the Super Bowl was a blowout, and the stock market is experiencing volatility. Not the best of news during these depressing winter months.
Putting all that aside, Thrive Wealth Management was founded to help our friends grow, flourish, and prosper; which often involves digesting short-term information with a focus on a long-term strategic plan. All of our clients have a personalized strategic plan around how much they should save, when they can retire, how much they can afford to spend in retirement, how much investment risk they should take (which always involves taking on as little risk as necessary in order for them to achieve their short-term and long-term goals), and how much they would like to leave loved ones and or charity-All controllable items that formulate a strategic plan. Without a plan (from an investment management perspective) our emotions will often cloud our judgment leading to high levels of stress and bad decisions.
Market Performance (as of 1/31/2014)
| Index | Year-to-Date Performance | 2013 Performance |
| S&P 500 (Largest Companies in the U.S.) | -3.5% | 32.4% |
| MSCI EAFE (Developed International Companies) | -4.0% | 22.8% |
| Barclays Aggregate (Total U.S. Bond Market) | 1.4% | -2.0 |
| Blend* | -1.6% | 16.7% |
| *40% S&P 500; 20% EAFE; 40% Barclays Aggregate (60% Stocks / 40% Bonds) | ||
| Source: www.morningstar.com | ||
We find this information helpful as it reiterates why diversification works (see our past blog “When Diversification Fails; and Why We Still Believe”) and helps us absorb negative performance in an academic rather than emotional context.
Market timing is not something we endorse nor is it part of a strategic plan. Here is an article (written a few years ago) describing "Risk of Market Timing".
We share this information with you as we want you to grow, flourish, and prosper. In order to do so, you must focus on what matters and stick to your strategic plan.
Stay warm,
Thrive Wealth Management